Decriminalisation of offences under GST law on the agenda of the 48th GST Council meeting

The 48th GST Council meeting may happen on the 17th of December, 2022. One of the items on its agenda is the decriminalisation of offences under the GST law. The limit for initiating prosecution for offences may be raised from Rs.5 crore to Rs.20 crore.

Nirmala Sitharaman will chair the Council meeting virtually on that day. The Council meeting is happening after a gap of over five months, and reports of many Group of Ministers (GoM) will be tabled that day. 

In September 2022, the government indicated that prosecution could be launched against the offenders where tax evasion or misuse of tax credits exceeds Rs.5 crore in value. It means legal proceedings can be initiated against the offenders or people who contravene the GST law. The offender’s property up to the defined limit shall never be attached for recovery under the GST law.

However, there is a proposal before the GST Council to increase this limit to Rs.20 crore. Another move is to remove those provisions on penal offences already covered by the Indian Penal Code (IPC). After that, the GST law will reference IPC for levying penalties for those offences.

In case the decriminalisation of the GST law proposal is passed by the GST Council, amendments to the CGST Act will be needed. Such amendments to the GST law shall be introduced in the Parliament’s winter session starting from the 7th of December 2022. After that, the states should enact amendments to their respective SGST laws.

Chapter XIX under the Central GST Act groups the offences and penalties in Section 122. It lists 21 offences that directly or indirectly point to tax evasion, some of which have a penalty equal to the value of tax evaded by the taxpayer. Section 132 also defines criminal provisions for some offences with imprisonment.

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