GST panel relaxes prosecution norms

Defines SUV for higher cess; cuts compounding fee

- SURABHI

THE GOODS AND Services Tax GST) Council on Saturday decided to decriminalise certain offences that are not directly linked to tax evasion and doubled the threshold for launching prosecution to 2 crore, but stopped short of accepting the businesses’ demand for a much more lenient approach on both aspects.

The council also sought to clear ambiguity over the definition of sports utility vehicle’ SUV), a product that is subject to a higher 22% compensation cess, in addition to the 28% marginal GST rate. The GST fitment panel would review whether mutli utility vehicles MUVs) too can be added to this definition to come under the higher cess.

The council decided to lower the compounding amount from the present range of 50-150% of tax amount to 25-100% with a view to reducing the workload of courts.

It, however, could not take up reports by the Group of Ministers on GST Appellate Tribunal and on capacity based taxation of pan masala and gutkha firms due to paucity of time.

A third report by the GoM online gaming, horse racing and casinos was not circulated to the council and was also not taken up.

Currently,a taxpayer can be punished with six-month imprisonment or fine or both in case he/she tampers with evidence or obstructs the officer to perform his/her duty or provides false information. The council’s decision means these offences will be decriminalised with necessary changes in the Central GST and state GST acts. To be sure, these offences won’t lead to arrest or jail term of the taxpayer, but will only attract penalties once the laws are amended.

However, more serious offences like issue of fake invoices, suppression of sales, wrongful use of input tax credit or not depositing the tax collected with the government will continue to lead to arrests and attract jail terms above the tax value threshold of 2 crore.