GST LLP - What are the GST penalties and punishments?

GST Legacy

GST penalties and punishments

The market is a platform full of competitive players and products giving us myriad choices at a competitive price. This is a mad contest for the consumers and nobody can say who might take us for a ride! We as consumers can buy the products or services as per our choices and needs. Thus, protection of consumers’ rights is significant to provide security to the consumers’ interests. GST is the giant leap for a country like India and it has revamped the indirect tax structure. Being a new tax regime, GST is still a ‘lingo’ among many people who are not aware of this new system. According to the survey of a news application called Way2Online, total 55% of Indian citizens are still unaware of GST. This article will throw light on consumer right protection, penalties, and punishments as per the Model GST Law.

The government of India passed a law, Consumer Protection Act 1986 and this act has already offered six basic right to the consumers in India. The center has amended this law to give more protection to the consumers with strict provisions with penalties, prosecution, and arrest.

Most of the manufacturers are facing challenges with the new tax system as the government has instructed them to print revised price on the old stocks. If the manufacturers don’t follow these rules, the law can charge them with the violation of the Packaged Commodities Rules. The government of India has told the manufacturers to sell the old stocks with new MRP by the end of September 2017. If the manufacturers don’t comply with this rule, they need pay a fine of INR 25,000 as first-time offense. If they violate this rule for the second time, they need to pay a fine of INR 50,000 and it may rise up to INR 1 Lakh for the third offense. Along with these fines, imprisonment up to one year makes the crime a serious one.

There are many high-end outlets in malls and airports that sell products on high MRP rates. But with GST roll out, the consumer affair ministry banned this ‘dual’ MRP policy, a process through which sellers charge higher MRP for their own products. Now, the big companies cannot charge a different price for products in premium locations.

We are mentioning penalties and offenses under the GST regime to give a clear picture to the people.


The GST law in India has listed 21 offenses:

  • Issuing wrong invoice for a supply and missing to give invoice.

  • Issuing invoice without supplying anything.

  • Failing to pay already collected Tax Collection Source (TCS) to the government within a period of 3 months.

  • Failing to collect and low collection of TCS under the section 43.

  • Failing to subtract and submit TDS.

  • Getting input tax credit without any receipt of goods or services.

  • Doing fraud to get refund.

  • Gaining input tax credit in an unauthorized way from a distributor.

  • Providing inaccurate information and financial records during tax filing.

  • Failing to pay tax.

  • Trying to register with wrong information.

  • Creating problems when officers are doing their duty.

  • Fail to send mandatory documents during goods transportation.

  • Hiding actual turnover to avoid tax.

  • Fail to keep books of accounts or documents as per new standards.

  • Hiding information when an officer ask during any proceeding.

  • Supplying of goods that need to seized.

  • Using others’ TIN to create invoice.

  • Destroying a proof.

  • Disposing detained goods.


The GST penalties are mentioned below:

Sometimes fraud tax filling happens due to unawareness of GST among people. The Model GST Law has provided the following provisions to save the innocent people;

  • If the tax fraud amount is INR 5000 or less, the crime is minor and penalty should not be imposed.

  • Easily rectifiable mistake is a minor crime and no penalty should not be imposed.

  • Penalty should be matched with the severity level of the crime.

  • The Model GST Law asks tax authorities to provide all the information to a person why he/she is penalized.

  • If the people are voluntarily admitting their crimes, GST law is lenient for them. The clause 68(5) of Model GST Law quotes that a tax official should consider this action while imposing a penalty. However, the clause 68(6) says that this provision is not applicable in particular case where the penalty amount is fixed.

  • The section 67 of Model GST Law says that penalty can rise till INR 25,000 if a separate penalty is not prescribed to the offence.

Conviction for any kind of offence will trigger the following punishments under the section 73(1):

Non-payment of tax


Between INR 25-50 lakhs 1 year imprisonment+fine
Between INR 50-250 lakhs 3 years imprisonment+fine
More than INR 250 lakhs 5 years imprisonment+fine

The Model GST Law says that the imprisonment term should not be more than a period of six months in the absence of special grounds which contradicts to the judgment given by the court. The courts having a lower position than a Judicial Magistrate of the First Class cannot hold any trial against GST related crimes. Furthermore, the court should assume that accused has a guilty mind and low breaking intention and the accused has all the right to prove his/her innocence with authenticating evidences.

India has embraced GST as the new indirect tax regime on 1st July 2017. It is the call of the hour to know GST in and out along with the new laws. The more people will be aware of the Model GST Law and its provisions along with penalties and punishment, it will be easier to create a clean tax governance in India. Furthermore, legal knowledge will also help to decrease GST related crime and ensure the people understand the new structure wholeheartedly.