Petty Defaults–Higher Penalties in GST Regime

Under the Goods and Services tax Act, there are cases where small procedural lapse
which is generally ignored and which is easily rectifiable may lead to big penalties. In
this write up, I tried to list out all small lapses which may lead to big penalties which I
observed are generally ignored even today in many business places. The Tax officers
are levying penalties for these lapses already. Quantum of penalties is really alarming.
Penalty for the non-compliance is costlier than cost for complying the same. As a
matter of awareness, I tried to brief on those lapses which may be rectified easily to
avoid paying penalties.
Nature of Default Penalty Remarks
GST Identification Upto Rs. 25,000 If you are regular GST dealer, GSTIN
Number (GSTIN) to be needs to be mentioned on the name board.
mentioned on the name If you opted for Composition levy, you
board need to mention ‘Composite Taxable
person’ on the name board. This rule is to
make the buyer to choose the supplier on
seeing the details on the name board.
GST Registration Upto Rs. 25,000 Any registered person needs to display
Certificate (GST REG – his GST registration certificate at
06) to be displayed at prominent place of business and at all
prominent place of additional places of businesses also. This
business at all places of is to ensure that the person is registered
business on seeing the certificate itself.
Not issuing Proper Rs. 25,000 Invoice is the document which contains
Invoice all details of supply and also an important
document based on which ITC is availed.
Hence, Invoice is given utmost
importance in GST, rather any indirect
tax law. So, all details as mentioned in
rules need to be mentioned on the
Invoice.
Not maintaining proper Upto Rs. 25,000 Stock record is one of the mandatory
Stock record records to be maintained as per Rule
56(2) of CGST Rules, 2017. From that
record, the whole operations can be
known.
Availing Input Tax Rs. 10,000 or 100% Input Tax Credit (ITC) is backbone of
Credit based on wrong of ITC wrongly GST structure. To avail ITC, proper
Invoice availed, whichever Invoice is must.
is higher + 24%
Interest from date
of availment to date
of reversal
Paying CGST instead of Pay Tax under CGST & SGST is payable for intra-state
IGST/SGST correct head with supplies and IGST for inter-state
Paying SGST instead no interest and supplies. Taxes paid under respective
of CGST/IGST claim refund of tax heads are transferred to respective
Paying IGST instead of paid under wrong governments. For Example, taxes paid
CGST/SGST head. under SGST head is transferred to

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 respective state government determined
based on place of supply. So, Tax paid
under wrong heads leads to transfer of tax
to that respective government which
leads to wrong accounting. Hence, under
GST, paying tax under correct heads is
important and hence, the penalty.
However, GST portal is now generating
challan automatically after entering data
in GSTR 3B. Chance of making this
mistake is reduced to great extent.
Not filing GSTR 3B on or Rs. 20 (Rs. 10 Timely Compliance is key to success of
before 20th of next month SGST + Rs. 10 GST return process and matching. Hence,
Not filing GSTR 1 on or CGST) per day of to encourage timely compliance, this
before due date delay in case of penalty
NIL returns.
In other cases, Rs.
50 (Rs. 25 CGST +
Rs. 25 SGST) per
day of delay
Not obtaining Rs. 10,000 + ITC Section 22 of CGST Act 2017 mandates
registration within 30 during the period of every person to register if the aggregate
days of date on which he delay is lost turnover exceeds Rs. 20 Lakhs. Every
is liable to get registered registered person needs to pay tax and file
returns. Hence, registration is an
important aspect in GST. Non-
registration even though he is liable or
takes registration late are both wrong
doings.
Invoice without supply Rs. 10,000 or 100% This situation may lead to availment of
(Accommodation Bills) of tax evaded , higher ITC without actually selling
whichever is higher goods.
Supply without Invoice Rs. 10,000 or 100% This situation may lead to supply without
(Non- Issuance of of tax evaded, recording it and also the buyer may lose
Invoice) whichever is higher ITC since he doesn’t possess proper
invoice.
Collects GST but doesn’t Rs. 10,000 or 100% In indirect taxes, the tax is collected from
pay to Government of tax evaded, the consumer and paid to Government. It
within 3 months from whichever is higher is not an expense to the supplier. So,
due date whenever tax is collected from a third
party on behalf of Government and the
same is not paid leads to mis-
appropriation of public money.
General Penalty Upto Rs. 25,000 If any of the provisions are defaulted and
nowhere penalty is specified, this general
penalty provision may be resorted to.

All the above mentioned defaults are easily rectifiable with minimal time and minimum
effort. Hence, all are requested to see that the simple provisions are being complied
and avoid big penalties

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