GST IPC Offence: Govt may remove penal offences covered under IPC from GST law

The government is considering to remove the penal offences which are already covered under the Indian Penal Code (IPC) from the GST Act to make it more taxpayer-friendly, an official said.

The proposal, part of the exercise to decriminalise GST law, is likely to be taken up in the next meeting of the GST Council. Once approved by the GST Council, the Finance Ministry will propose amendments to the GST law, which could be taken up in the upcoming winter session of Parliament next month.

"Law committee has finalised the changes in Section 132 of the GST Act as part of the exercise to decriminalise the law," the official told PTI.

The offences that are similar to those covered under the Indian Penal Code would be removed from GST law, the official added.

The amendments would be placed before the GST Council for approval. Thereafter, it would go to Parliament for effecting changes in the GST Act.

Once approved by Parliament, states would be required to amend their state GST laws.

Tax experts said primarily fake billing offences could be part of the decriminalisation exercise. They may also include supplies of goods or services or both without proper invoices and issues of invoices or bills without a supply of goods.

Also, the act of availing input tax credit using fake invoices could be covered under the offences mentioned in the IPC.

AMRG & Associates Senior Partner Rajat Mohan said it is anticipated that offences around issuing and accepting fake invoices could be moved to the Indian Penal Code.

"Maximum sentence under section 420 of IPC for cheating cases is 7 years, whereas the same is ring-fenced to 5 years in GST code. With this change, deceitful taxpayers could be charged for up to 7 years of imprisonment under section 420 of IPC, irrespective of the tax evaded," Mohan said.

This would be a massive departure from current GST provisions, whereby punishment under Section 132 of GST law depends on the quantum of tax evaded, Mohan added. 

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