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Applying for Compounding of Offences Under GST

This guide details the procedure for applying for compounding of an offence under Goods and Services Tax (GST) in India. Compounding allows taxpayers to resolve prosecution proceedings by paying a monetary compensation, thereby avoiding criminal charges and further penalties for the same infraction. The article outlines the step-by-step application process on the GST portal, covering necessary details, document uploads, and submission methods.

📖 2 min read read🏷️ Compounding of Offence

In GST, 'compounding of offence' refers to a process where a taxpayer pays a monetary sum to avoid criminal prosecution. This acts as a resolution between the taxpayer and the tax authority, leading to the termination of criminal proceedings and preventing further penalties for the same infraction. For more details on prosecution, refer to Prosecution under GST.

Steps to Apply for Compounding of an Offence under GST

Start by logging into the GST portal. From the dashboard, proceed to 'Services', then 'User services', and finally 'My Applications'.

On the 'My Applications' page, choose 'Compounding Application' as the application type, then click 'New Application'. The system will then show the 'Compounding Application' page.

Complete the required fields with the following details:

  • Indicate if an order for initiating prosecution has already been issued. If affirmative, input the prosecution notice number and click 'Search'. This action will automatically populate prosecution details in subsequent fields (2, 3, and 4), allowing you to proceed directly to point 5. If negative, specify the order reference number under 'Any other order against which prosecution is contemplated?'. The taxpayer must manually complete these particulars.
  • State the specific provisions of the Act that have been violated. Select all relevant cases from the provided options.
  • Enter the total amount of evasion. Specify the sum under each major and minor financial head.
  • Indicate the period during which the offence occurred. Input the start and end dates.
  • Clarify if this is the first offence committed. Choose 'Yes' or 'No'. If 'Yes', advance to point 6. If 'No', provide specifics of prior instances within 250 characters before continuing.
  • Confirm if any other legal proceedings for the identical offence are being considered under a different statute. Answer 'Yes' or 'No'. If 'Yes', furnish details of previous cases within 250 characters and proceed. If 'No', move to the document upload section.
  • Supporting document upload: This section is optional; applicants may upload relevant supporting documents if necessary.
  • Declaration and verification: Tick the declaration box, input verification details, and select the authorized signatory's name and the location.

Next, click 'Preview' to review the application in Form GST CPD-01, then select 'Proceed to File'. A warning will appear; confirm by clicking 'Proceed to File' again.

Finally, submit the application using either a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). An application reference number will be generated upon successful submission.

Further Reading

Frequently Asked Questions

What is the purpose of GST in India?
GST (Goods and Services Tax) in India is a consumption tax levied on the supply of goods and services, aiming to streamline indirect taxation, reduce cascading effects, and create a common national market.
Who is required to register for GST?
Businesses exceeding a specified aggregate turnover threshold (which varies by state and type of business) are generally required to register for GST. Additionally, certain types of businesses, like those engaged in inter-state supplies or e-commerce operators, must register irrespective of turnover.
What are the different types of GST in India?
There are primarily four types of GST: Central GST (CGST) levied by the Centre, State GST (SGST) levied by states, Integrated GST (IGST) levied on inter-state supplies and imports by the Centre, and Union Territory GST (UTGST) for Union Territories without a legislature.
How does Input Tax Credit (ITC) work under GST?
Input Tax Credit allows businesses to reduce the tax they pay on their output by the tax they have already paid on inputs. This mechanism prevents the cascading of taxes by ensuring that tax is paid only on the value added at each stage of the supply chain.
What are the consequences of not complying with GST regulations?
Non-compliance with GST regulations can lead to various penalties, including late fees for delayed filings, interest on unpaid taxes, and fines for errors, fraud, or evasion. Severe cases may also result in prosecution.

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