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CA Final · Indirect Tax Laws · Offences and Penalties and Ethical Aspects under GST

Kaveri Metals Ltd. was allowed to compound an offence under clause (c) of section 132(1) last year. This year it is accused of another offence under clause (d) of section 132(1) and applies for compounding. What is the position under section 138?

Compounding is not available. Section 138 bars anyone already allowed to compound once for any offence in clauses (a) to (f), (h), (i) and (l) of section 132(1). Both clause (c) and clause (d) fall in this group, so the second application fails.

  1. ACompounding is allowed because the earlier offence was under a different clause
  2. BCompounding is allowed if the company pays 100% of the tax involved
  3. CCompounding is not available, because a person already allowed to compound once for offences in clauses (a) to (f), (h), (i) and (l) is barredCorrect
  4. DCompounding is allowed only if the first compounding was before prosecution

Explanation

The proviso to section 138(1)(a) bars a person who has been allowed to compound once in respect of any offence in clauses (a) to (f), (h), (i) and (l) of section 132(1). Clauses (c) and (d) both fall in that group, so the different clause is no escape, and the amount paid is irrelevant.

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