The Central Board of Revenue (CBR) has widened the scope of sales tax penalty on committing tax frauds and proposed harsh punishments for the sales tax officials involved in such cases. The CBR has substituted section 33 of the Sales Taxt Act, 1990 in line with the section 156 of the Customs Act, 1969.
The new section has laid down 17 different penalties applicable on violations of various rules and regulations by the registered persons. It is proposed to give punishment of imprisonment to persons, who submit false statement or forged documents/sales tax invoice. The culprit will also deposit penalty of Rs 25,000 or 100 percent of the amount of tax involved, whichever is higher. Those who are unable to make payment as per procedure of section 33 of Sales Tax Act, would be liable to penalty of Rs 5,000 or three percent of the amount of tax involved; whichever is higher.
Commenting on the decision, leading chartered accountants said that the penalties were necessary for proper enforcement and compliance by the taxpayers.
According to the punishment introduced for the tax officials in the budget, where any sales tax officer causes loss to revenue, he shall be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to amount equal to the amount of tax involved, or both.
Following are the punishments proposed in section 33 on committing tax frauds by the business community: Where any person fails to furnish a return within the due date, such person shall pay a penalty of Rs 5,000. Provided that in case a person files a return within 15 days of the due date, he shall pay a penalty of Rs 100 for each day of default.
Any person who fails to issue an invoice when required under Sales Tax Act, he shall pay a penalty of Rs 5,000 or three percent of the amount of the tax involved; whichever is higher.
Any person who issues without authority an invoice in which an amount of tax is specified, such person shall pay a penalty of Rs 10,000 or five percent of the amount of the tax involved; whichever is higher.
If a person fails to notify the changes in the particulars of registration of taxable activity, he shall pay a penalty of Rs 5,000. Any person who fails to deposit the amount of tax due within the given time period, shall pay a penalty of Rs 10,000 or five percent of the amount of the tax involved; whichever is higher. Provided that, if the amount of tax or any part thereof is paid within fifteen days from the due date, the defaulter shall pay a penalty of five hundred rupees for each day of default.
No penalty shall be imposed when any miscalculation is made for the first time during a year and if the amount of tax due is not paid even after the expiry of a period of sixty days of issuance of the notice for such payments by an officer of Sales Tax, the defaulter shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term that may extend to three years, or with fine which may extend to amount equal to the amount of tax involved, or with both.
Any person who repeats erroneous calculation in the return during a year whereby amount of tax is less than the actual tax such person shall pay a penalty of Rs 5,000 or three percent of the amount of the tax involved; whichever is higher. Any person who is required to apply for registration under this Act fails to make an application for registration before making taxable supplies, he shall pay a penalty of Rs 10,000 or five percent of the amount of tax involved; whichever is higher. Provided that such person who is required to get himself registered, fails to get registered within sixty days of the commencement of taxable activity, he shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to an amount equal to the amount of tax involved, or with both.
If anyone fails to maintain records, such person shall pay a penalty of Rs 10,000 or five percent of the amount of tax involved; whichever is higher.
Where a registered person who, without any reasonable cause, in non compliance with the provisions of section 25-(a) fails to produce the record on receipt of first notice (such person shall pay a penalty of Rs 5,000); (b) fails to produce the record on receipt of second notice (such person shall pay a penalty of ten thousand rupees) and (c) fails to produce the record on receipt of third notice (such person shall pay a penalty of Rs 50,000).
Any person who fails to furnish the information required by the Board through a notification, such person shall pay a penalty of Rs 10,000.
Other punishments included that if any person who, submits a false or forged document to any officer of sales tax; or destroys, alters, mutilates or falsifies the records including a sales tax invoice; or knowingly or fraudulently makes false statement, false declaration, false representation, false personification, gives any false information or issues or uses a document which is forged or false, in all these cases such person shall pay a penalty of Rs 25,000 or 100 percent of the amount of tax involved; whichever is higher.
He shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to five years, or with fine which may extend to an amount equal to the loss of tax involved, or with both.
Any person who denies or obstructs the access of an authorised officer to the business premises, registered office or to any other place where records are kept, or otherwise refuses access to the stocks, such person shall pay a penalty of Rs 25,000 or 100 percent of the amount of tax involved; whichever is higher. He shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine.
Failure to present account or records when required under sections 25, 38 or 38A may extend the penalty to an amount equal to the amount of tax involved, or both fine and imprisonment.
Under the proposed law, any person who commits, causes to commits or attempts to commit the tax fraud, or abets or connives in commissioning of tax fraud, such person shall pay a penalty of Rs 25,000 or hundred percent of the amount of tax involved; whichever is higher. He shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to five years, or with fine which may extend to an amount equal to the loss of tax involved, or with both.
Where any person violates any embargo placed on removal of goods in connection with recovery of tax, he shall pay a penalty of twenty five thousand rupees or ten percent of the amount of the tax involved; whichever is higher. He shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to one year, or with fine which may extend to amount equal to the amount of tax involved, or with both.
Any person who obstructs the authorised officer in the performance of his official duties, such person shall pay a penalty of Rs 25,000 or 100 percent of the amount of tax involved; whichever is higher.
If a person who fails to make payment in the manner prescribed under section 73 of this Act, such person shall pay a penalty of Rs 5,000 or three percent of the amount of tax involved; whichever is higher.
Any person who fails to fulfill any of the conditions, limitations or restrictions prescribed in a notification issued under any of the provisions of Sales Tax Act, such person shall pay a penalty of Rs 5,000 or three percent of the amount of tax involved; whichever is higher.
Any person who contravenes any of the provisions of this Act for which no penalty has, specifically, been provided in this section, such person shall pay a penalty of five thousand rupees or three percent of the amount of tax involved; whichever is higher.
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