Section 138 of The Central Goods and Services Tax Act, 2017
- (1)Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case may be, of such compounding amount in such manner as may be prescribed: Provided that nothing contained in this section shall apply to--- 1[(a) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f), (h), (i) and (l) of sub-section (1) of section 132;] 2* * * * * 3[(c) a person who has been accused of committing an offence under clause (b) of sub-section (1) of section 132;]
- (d)a person who has been convicted for an offence under this Act by a court; 4* * * * *
- (f)any other class of persons or offences as may be prescribed: Provided further that any compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other law: Provided also that compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences.
- (2)The amount for compounding of offences under this section shall be such as may be prescribed, subject to the minimum amount not being less than 5[twenty-five per cent. of the tax involved and the maximum amount not being more than one hundred per cent. of the tax involved].
- (3)On payment of such compounding amount as may be determined by the Commissioner, no further proceedings shall be initiated under this Act against the accused person in respect of the same offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated.
Summary
- This provision allows the Commissioner to settle or compound certain tax offences in exchange for a payment, preventing a criminal trial.
- Compounding can happen either before or after a prosecution is started.
- A person cannot use this if they have already compounded certain specific serious offences before.
- The person must first pay all the tax, interest, and penalty involved in the offence before they can compound it.
- The compounding amount must be between twenty-five percent and one hundred percent of the tax involved.
- Once the compounding amount is paid, any existing criminal proceedings for that offence stop.
Practical examples
FAQ
1. Can someone settle a tax offence without going to court under Section 138 of The Central Goods and Services Tax Act, 2017?
Yes, under Section 138 of The Central Goods and Services Tax Act, 2017, the Commissioner can compound an offence upon payment of a compounding amount, which stops criminal proceedings.
2. Is compounding allowed for a person convicted by a court under Section 138 of the CGST Act?
No, Section 138 of the CGST Act specifically states that compounding does not apply to a person who has already been convicted by a court for an offence under this Act.
3. What must be paid before compounding is allowed under Section 138 of the GST law?
Under Section 138 of the GST law, compounding is only allowed after the payment of tax, interest, and penalty involved in the offence.
4. What are the limits for the compounding amount under Section 138 of the Central GST Act?
According to Section 138 of the Central GST Act, the compounding amount must not be less than twenty-five percent of the tax involved and not more than one hundred percent of the tax involved.
Test yourself
Q1.Under Section 138 of The Central Goods and Services Tax Act, 2017, what is the minimum compounding amount that can be set?
Q2.Who has the authority to compound an offence under Section 138 of the CGST Act?
Q3.What happens to a criminal proceeding if the offence is successfully compounded under Section 138 of the GST law?
Q4.Under Section 138 of The Central Goods and Services Tax Act, 2017, how does a previous compounding under Section 132 affect a person?
Q5.Before compounding is permitted under Section 138 of the CGST Act, what must the accused person pay first?