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Research Article 


A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION

Vijai Bahadur Srivastava, Prof(Dr) JPYadav.

Abstract
It is settled law that „Penalty‟ is not a source of revenue under taxing statute. It is imperative for
the legislature to incorporate penal provisions to regulate the habits of the tax payers to pay their taxes in time,
to follow all the rules & regulations, and to alert, those unscrupulous persons meeting with dire consequences, if
found involved in tax evasion or misappropriation, cheating & forgery in records etc. The Hon‟ble Supreme
Court of India observed in Hindustan Steels Limited Vs. State of Orissa that “the penalty should not ordinarily
be imposed merely because it is lawful to do so.” Penalty may be imposed only after establishing wilful
commencement of default, with the intent to evade tax. For imposing penalty the Apex courts, construing the
various statutes, settled the law to save the honest and innocent tax payers from the harrasive attitudes of tax
officers to impose the penalty without establishing the guilty mind. In GST Act 2017 which is framed recently,
should have followed that settled principles, but the framers did not do so, instead they ignored & bypassed the
settled legal principles. They bifurcated the word penalty into late fee, fine, interest (excess charging of the
interest) to collect more & more revenue automatically to avoid the following the principle. The Apex Court
held the interest on late payment of tax as compensatory, but the compensatory interest means charged at the
normal rate of interest as in the market i.e. as the bank charges in lending money. The bank charges at 12% but
why it is charged at the rate of 18% & 24% in GST Act. This excess charging includes penalty or penal interest
which Government get as revenue without following any principles settled by the courts. It is compensatory +
penal. On the defaults which are clearly made under word penalty which is in section 122 where the proving of
guilty mind has been withdrawn. The provision of prosecution has also been provided in section 132 almost for
all the defaults which are punishable U/s 122.
The punishment is prescribed for five year‟s imprisonments or fine for grievous offences down to the six months
for those of trivial defaults also, in which there should have been only penalty. Erstwhile only grievous defaults
like fraud, cheating & man handing of Government officers were dealt under the provisions of Indian Penal
Code by which the major crimes were clearly covered. The cases were lodged through the police, and due to
change in department the arbitrariness was filtered. By giving these powers to tax officers, who knew the tax
payers from beginning shall carry the arbitrariness in the mind. The pick and choose system will also prevail,
which will nurture corruption & enmity in the department. The honest tax payers may be, humiliated by the
threat of prosecution.
The author is a legal practitioner in tax matters since 1975, his observation is that the change in penalty
& prosecution under GST Act is very harsh and not good. It may crop up more harassment & corruption by the
threat of these provisions, certifying the slogan: „Power corrupts and absolute power corrupts absolutely.‟

Key words: Penalty, late fee, fine, levy, excess rate of interest, prosecution under GST, penal action, Indirect Tax, GST, Mensrea. intention to evade tax


 
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Pubmed Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav. A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION. JCR. 2020; 7(19): 6000-6008. doi:10.31838/jcr.07.19.694


Web Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav. A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION. http://www.jcreview.com/?mno=133663 [Access: September 14, 2020]. doi:10.31838/jcr.07.19.694


AMA (American Medical Association) Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav. A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION. JCR. 2020; 7(19): 6000-6008. doi:10.31838/jcr.07.19.694



Vancouver/ICMJE Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav. A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION. JCR. (2020), [cited September 14, 2020]; 7(19): 6000-6008. doi:10.31838/jcr.07.19.694



Harvard Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav (2020) A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION. JCR, 7 (19), 6000-6008. doi:10.31838/jcr.07.19.694



Turabian Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav. 2020. A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION. Journal of Critical Reviews, 7 (19), 6000-6008. doi:10.31838/jcr.07.19.694



Chicago Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav. "A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION." Journal of Critical Reviews 7 (2020), 6000-6008. doi:10.31838/jcr.07.19.694



MLA (The Modern Language Association) Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav. "A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION." Journal of Critical Reviews 7.19 (2020), 6000-6008. Print. doi:10.31838/jcr.07.19.694



APA (American Psychological Association) Style

Vijai Bahadur Srivastava, Prof(Dr) JPYadav (2020) A CRITICAL EVALUATION OF „PENALTY & PROSECUTION UNDER GST ACT-2017‟ IN INDIA, WHETHER HEAVY PENALTY AND RIGOROUS PUNISHMENT MAY STOP TAX-EVASION. Journal of Critical Reviews, 7 (19), 6000-6008. doi:10.31838/jcr.07.19.694