Compounding Of Offences under GST Act.

Section 320 of the Code of Criminal Procedure defines “compounding” as to forbear from prosecution for consideration or any private motive. Aiyar’s Law Lexicon defines it variously as “arranging, coming to terms; condone for money”. Compounding is thus is a legally recognized arrangement whereby the person charged with an offence is offered the option of avoiding prosecution and imprisonment in lieu of monetary considerations by way of penalty; compounding is essentially a contract between the State and the offender whereby the State secures revenue and the offender secures immunity from prosecution.

The following offences are not eligible for compounding:

•          Offences specified in clauses (a) to (j of para 24.17 and other offence specified in clause (z which are relatable to offences specified in clauses (a) to (h of the said para; if the person charged with the offence had compounded earlier in respect of any of the said offences

•          Any offence (other than the above offences) under any SGST Act! CGST Act/IGST Act in respect of a supply with value exceeding 1 crore, if the person charged with the offence had compounded earlier in respect of any of the said offences

•          Any offence which is also an offence under any other law

•          A person who has been convicted for an offence under this Act by a court;

•          a person who has been accused of committing an offence specified in clause (g) or clause (j) or clause (k) of para 24.17; and

•          Any other class of offences or persons that may be prescribed in this behalf.

Any other offence may, upon payment of the prescribed (compounding) amount be compounded and such compounding is permissible either before or after the institution of prosecution. Compounding is to be permitted only after payment of tax, interest and penalty and compounding shall not affect any proceeding already instituted under any other law.

The lower limit for compounding amount is to be the greater of the following amounts:—

•          50% of tax involved, or

•          Rs. 10,000

The upper limit for compounding amount is to be greater of the following amounts:

•          150% of tax involved or

•          Rs. 30,O0O

On payment of compounding amount:

•          no further proceeding to be initiated under this Act in respect of the same offence, and

•          criminal proceeding already initiated in respect of the same offence to stand abated.

 
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