GST Council, Benefits of GST, Offences under GST, New amendments to GST.
The 48th GST Council, was presided over by the Finance Minister and suggested decriminalising some offences under Section 132 of the Central Goods and Services Tax (CGST) Act of 2017.
Enumerate the indirect taxes which have been subsumed in the Goods and Services Tax (GST) in India. Also, comment on the revenue implications of the GST introduced in India since July 2017. (10 marks, 150 words) UPSC CSE 2019
About the need for criminalising certain acts under GST
Tax evasion has significantly increased, with many instances of taxpayers utilising diverse tactics to evade indirect tax.
Technology and information from e-way bills and GST filings are being actively used by tax authorities to detect evasion.
To ensure seamless intrastate or interstate trade of products, to fight corruption, and to maintain an efficient tax collection system, the GST law provides harsh penalties.
Offences under GST Act 2017
The GST Law Provides for two Different Types of Penalties
Financial penalties: The departmental authorities have the power to impose financial penalties and the confiscation of property as punishments for breaking the law.
The GST Law also includes prison time and fines as criminal punishments, however, they can only be given out in a criminal court after an accusation.
Sections 122 to 131 of the CGST Act of 2017
While Sections 132 to 138 contain provisions relating to prosecution and compounding, this section only contains laws relating to penalties.
The length of the prison sentence is based on the amount of tax avoided, the amount of Input Tax Credit (ITC) wrongly claimed or utilised, or the amount of refund improperly claimed.
Cognisable and non-cognisable offences
The section further categorises offences into categories that include those that are cognizable and bailable and those that are not.
Many non-compliances are found to fall under both the prosecution and compounding categories of penalties.
Recommendations of GST Council
Increasing from one to two crore the minimum tax amount required to launch a GST prosecution.
Lowering the rate of compounding from 50% to 150% of the tax to 25% to 100% of the tax.
Decriminalizing specific offences under Section 132 of the CGST Act of 2017, such as interfering with an officer's performance of their responsibilities, purposeful tampering with tangible evidence, and failing to provide information
Refunding those who didn't register and assisting small firms with e-commerce are some other ideas.
Impact of Decriminalization
The law is still in its early stages of development, making it challenging and unpredictable to implement.
Streamlining the laws: There are situations where judgments and conclusions made by courts contradict. Laws are still being streamlined by the government.
Impact on business: It's crucial to understand that enforcing penal provisions in a murky environment fundamentally changes how companies view risk and uncertainty, which has a direct bearing on their capacity to operate.
Investor demotivation: The legislation already includes enough sanctions to act as a deterrent to tax avoidance. Even before engaging in any business activity or investment, investors may be deterred by the threat of criminal penalties in little, pointless, and inconsequential concerns.
The GST Council, which will be a combined forum of the Center and the States, shall be composed of the following members in accordance with Article 279A
Chairperson: Union Finance Minister.
Members: The Union Minister of State, in charge of Revenue of finance, the Minister responsible for finances or taxes, as well as any additional Ministers chosen by each State Government.
According to Article 279A (4), the Council will advise the Union and the States on significant GST-related issues, such as GST exemptions, model GST Laws, etc.