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

Mehra Traders, Jaipur, is facing prosecution under GST law. It applies to the Commissioner in FORM GST CPD-01 for compounding of the offence after prosecution has already been instituted. Which statement is correct as per the CGST Act and Rules?

Compounding can be allowed either before or after prosecution is instituted. The Commissioner may compound the offence on payment of the compounding amount, so an application made after prosecution has begun is valid and need not be rejected merely for that reason.

  1. ACompounding is possible only before prosecution is instituted, so the application must be rejected
  2. BCompounding is possible either before or after the institution of prosecution, on payment of the compounding amountCorrect
  3. CCompounding is possible only after the court convicts the accused
  4. DCompounding is possible only if the Principal Commissioner of a different zone approves it

Explanation

Section 138(1) provides that an offence may be compounded by the Commissioner either before or after the institution of prosecution. Option A is wrong because it reverses this. Conviction by a court in fact bars compounding for that person.

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