Consequences of non-filing of GST returns

Rajdeep Saini

20 Nov, 2020

The effective implementation of the new indirect taxation law i.e. GST requires stringent action against the offenders of the tax. To promote compliance with India’s new general sales tax regime, the state has come up with three important approaches: Prosecution, Interest and monetary penalties. In this blog we will discuss the penalties and prosecution provided under the Central Goods and Services Tax Act, 2017^[1] for the non filling returns of GST.

As per Section 46 of the CGST Act, 2017 any notice in FORM GSTR-3A is issued, to any registered person who is unsuccessful to file an annual return requiring them to provide such return within 15 days. Further, Section 62 offers assessment for non-filing of GST return of registered persons who fail to provide an annual return.

Prescribe guidelines for non-filing of GST Returns

The following are the guidelines prescribed by the CGST Act:

• An automated message will be sent to the registered tax payer 3 days before the due date of filing the GST return.
• An automated message and a mail will be sent to the defaulter in no time after the due date of the filling of the return.
• A Notice in the Form GSTR 3A will be sent by electronic means within 5 days after providing the return to the registered person and asking him to provide return within 15 days.

After the completion of the 15 days of the notice, the prescribed authority will proceed to assess the tax liability by taking into consideration all the relevant information and issue an order in the prescribed form. The authority is obligatory to upload the summary in the prescribed Form.

Penalty for late filing of GST returns

If any offense is committed under the GST Act then the penalty will have to be paid as prescribed under the CGST Act, 2017. The late filing of the returns may attract a penalty called a late fee. This fee can be up to 100 per day as per the act. The state GST will charge 100 and the central GST will charge it own 100 which make it total of Rs. 200/-day. The maximum penalty can be of Rs. 5000/-. However, there is no late fee of the IGST in the matter related to delay filling.

Alongside the late fees, the total interest has to be paid is at 18% per annum. It has to be considered by the tax payer on the tax to be paid. The period of time will start from the next day of filing to the date of payment.

Penalty for not filing of GST returns

If any individual does not file any GST return to the prescribed authority, then the subsequent returns cannot be filled. For instance, if the general sales tax return -2 has not been filled to the authorities then the next return GSTR-3 and the subsequent return cannot be filled. Hence, the non filling of the return of GST has a cascading effect; this can lead to heavier penalties and fines.

Cancellation of Registration

Under the following condition the GST registration can be canceled are:

• If any individual has not provided a return of the GST for a continuous period of six months period.
• If a composition dealer has not provided a return for the three quarters.
• Any individual who has taken registration voluntarily and has not begun its business within six months from the date of registration.
• Any person who has acquired by a willful suppression of facts or misstatement fraud.

Confiscation of goods and conveyance

There are many offenses that will lead to either the confiscation of goods or conveyances or a penalty. The penalty will be amount to 10,000 rupees or a sum equal to the tax evaded.

These offenses are mentioned below:

• If an individual fails to give account for the goods on which a person is legally responsible to pay tax;
• Receiving and supplying of goods in violation of any rules or provision, with the objective to evade payment of tax;
• Providing any goods accountable to tax without registering; and
• Using transportation to deliver goods in violation of any provisions or rules

The Confederation of All India Traders (CAIT) stated that the elevated penalties will guarantee that the taxes collected by the merchant will not be used for the financial benefit or working capital of the companies. This should result in a more stable administration and tax collection.

Fine and imprisonment for non filing of GST Return

The following are the cases where the fine and imprisonment will be applicable:

• Obstructing and preventing any officer in performing of his/ her duties, destroying or tampering with any documents or evidence –> 6 months imprisonment with fine;
• Failure to supply information  or supplying false information required by the Act –> 6 months imprisonment with fine;
• In the situations where the Input Tax Credit mistakenly availed on a sum exceeding Rs. 50 Lakhs but not more than INR 1 Crore or in the case of tax evasion –> Imprisonment which can be extend up to 1 year with fine;
• In a case where an Input Tax Credit erroneously availed on sum exceeding INR 1 Crore but not more than INR 2.5 Crores – Non-bailable imprisonment which can expanded  up to 3 years with a fine;
• In the situations where the Input Tax Credit incorrectly availed on a sum more than INR 2.5 Crores – Non-bailable captivity which can be extended till 5 years with a fine.

Conclusion

Read our article:GST Returns: Types and their Due dates