FRAUDULENT TRANSACTIONS & OWNERSHIP OF GOODS., Goods and Services Tax - GST

[Sadanand Bulbule]

Circular No. 76/50/2018-GST dated 31/12/2018 issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) reads as under:

6. Who will be considered as the ‘owner of the goods’ for the purposes of section 129(1) of the CGST Act?

It is hereby clarified that if the invoice or any other specified document is accompanying the consignment of goods, then either the consignor or the consignee should be deemed to be the owner. If the invoice or any other specified document is not accompanying the consignment of goods, then in such cases, the proper officer should determine who should be declared as the owner of the goods.

In this regard my understanding is as under:

The clarification being so, whether the concept of deemed ownership of goods can be applied even in respect of fraudulent transactions with manufactured documents for the purpose Section 129(1)(a) of the Act?

If the answer is yes, is it not a bonanza for the fraudsters to seek sympathetic remedy under Section 129(1((a) of the Act whenever caught red handed on investigation and escape from the full penalty under Section 129(1((b) of the Act?

Therefore the intrinsic intent of the said Circular needs to deciphered and if warrants, the surface meaning be redefined by GST Policy Wing confining it to protect the genuine and trusted tax invoice or any other specified documents accompanying the consignment of goods in transit. The core of the transactions should be focussed rather than the mechanical compliance with manufactured documents. In simple words, fraudsters should be kept outside from the purview of Section 129(1)(a) of the Act in the interest of equity. Because the fraudulent transactions are not simple violation of law attracting symbolic and graceful penalty. In any event, the remedy provided under Section 129(1)(a) of the Act should not become worst than decease as far as fraudulent transactions are concerned.

Kindly enlighten me with sagacious suggestions.

Posts / Replies

[KASTURI SETHI]

Jingoism ? It is very easy for the department to identify and nab the actual culprit. There are so many ways and means.Not worth discussion here.

[Sadanand Bulbule]

Rightly said Sir.

It is not appropriate here to discuss openly the way the department can handle such situations. Being taxman, I can understand the implications. Anyway your inspiration is welcome. Thank you so much.
Regards.

[jayakumar sR]

The law contemplates for levy of one time tax and one time penalty u/s 129(1)(a) with an intention to A-Curb the evasion B- to make good of the tax loss..... whereas 129(1)(b) enables the Proper Officer to levy 100% for the reason that in case if later on the Original Owner appears before the Authority and seeks for the release of Goods then if not goods the consideration equivalent to the goods value should be available on hand to refund. if the goods are released to a third party who is not the actual owner of goods then the revenue becomes answerable for the lapse and the third party gets the goods to his custody by paying only tax and penalty of one time.

Hence the proposer Officer has been given guide lines to identify the original Owner for release of goods. Thats all the inetention of the statute is not to enrich revenue by levying (100% -Tax) as penalty.