Introduction: This article provides insights into the recent decriminalization of offenses under the Goods and Services Tax (GST) regime in India. It sheds light on the Government's approach to this decision, the amendments made, the assessment of its impact on revenue collection and compliance levels, considerations of deterrence against tax evasion and fraud, and the involvement of State Governments and stakeholders in the decision-making process.

Analysis:

(a) Decriminalization of Offenses: The Government has taken steps to decriminalize certain offenses under the GST regime based on recommendations from the GST Council. The amendments are aimed at reducing the scope of activities that were previously liable for punishment. These include obstructing or preventing officers from performing their duties, deliberate tampering of evidence, and failure to provide information. Additionally, the minimum threshold for launching prosecution under GST has been raised to Rs. 2 crores from Rs. 1 crore, except for cases involving the issuance of invoices without supply of goods or services.

(b) Impact Assessment: The decision to decriminalize offenses under GST was made after considering various aspects, including its potential impact on revenue collection and compliance levels. The GST Council, a constitutional body comprising representatives from Central and State Governments, played a pivotal role in making these recommendations. This suggests a comprehensive evaluation of the pros and cons of decriminalization.

(c) Deterrence Against Tax Evasion and Fraud: While the move to decriminalize certain offenses may raise concerns about its impact on deterrence against tax evasion and fraud, it's important to note that this decision was made in consultation with relevant stakeholders and experts. The amendments made have been designed to maintain a balance between encouraging compliance and ensuring fairness in the treatment of taxpayers.

(d) Involvement of State Governments and Stakeholders: The decision-making process surrounding the decriminalization of offenses under GST involved extensive discussions with stakeholders and representatives from State Governments. This collaborative approach ensures that the concerns, feedback, and suggestions of all relevant parties are considered before making policy changes of this nature.

Conclusion: The Government's approach to decriminalize certain offenses under the GST regime showcases a balanced and well-considered strategy. The amendments made are a result of careful evaluation, involving the expertise of the GST Council, consultations with stakeholders, and consideration of potential impacts on revenue collection, compliance levels, and deterrence against tax evasion and fraud. This approach reflects a commitment to maintaining a fair and effective GST system that benefits both taxpayers and the broader economy.

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GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
RAJYA SABHA

UNSTARRED QUESTION No. 2153
ANSWERED ON 08/08/2023

DECRIMINALIZATION UNDER GST

2153 DR. ASHOK KUMAR MITTAL:

Will the Minister of FINANCE be pleased to state:-

(a) whether Government intends to decriminalize any offenses under the Goods and Services Tax (GST) regime;

(b) whether Government has conducted any comprehensive assessment of the impact of decriminalizing offenses under the GST system, on revenue collection and compliance levels;

(c) whether Government has considered the possible adverse effects of this move on the deterrence against tax evasion and fraud; and

(d) whether Government intends to seek feedback from the State Governments and other stakeholders regarding the decriminalization of offenses under GST before finalizing any policy changes?

ANSWER

THE MINISTER OF STATE IN MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)

(a) On the recommendations of the GST Council in its 48th meeting held on 17th December, 2022, the following amendments in respect of decriminalization of certain offences have been carried out in CGST Act, 2017 vide Finance Act, 2023:

(i) Sub-section (1) of section 132 of CGST Act has been amended so as to decriminalize certain activities that were liable for punishment, viz.-

• obstruction or preventing any officer in discharge of his duties;
• deliberate tampering of material evidence;
• failure to supply the information.

Further, minimum threshold for launching prosecution under GST has been raised to Rs. 2 crores from Rs. 1 crore, except in case of issuance of invoices without supply of goods or services or both.

(ii) Sub-section (1) & (2) of section 138 of CGST Act have been amended, inter alia to provide for reduction in the amount for compounding of offences under GST.

It has been notified that the aforesaid amendments in CGST Act, 2017 shall come into force from 01.10.2023.

(b) and (c) The decision to decriminalize the above offences has been taken on the recommendations of the GST Council. The Council has made the said recommendations after considering all aspects, including impact on revenue collection and tax compliance levels.

(d) The aforesaid amendments regarding decriminalization of offenses under GST have been carried out after extensive discussions with the stake holders as well as due deliberations by the GST Council which is a constitutional body comprising of representatives from Central and State Governments.

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