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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Procedural Compliance under GST

Mehta Traders Pvt Ltd of Surat voluntarily informs the proper officer of a breach of the GST law before the officer has discovered it. Under Section 126, what is the effect of this voluntary disclosure?

The proper officer may treat the voluntary disclosure, made before the breach was discovered, as a mitigating factor while quantifying the penalty. It is discretionary; the Act does not prescribe automatic waiver or a fixed percentage reduction.

  1. AThe proper officer may consider it as a mitigating factor when quantifying the penaltyCorrect
  2. BPenalty is automatically waived in full
  3. CThe officer must reduce the penalty by exactly half
  4. DThe disclosure has no bearing on penalty but only on interest

Explanation

Section 126(5) provides that voluntary disclosure before discovery by the officer may be considered by the proper officer as a mitigating factor in quantifying penalty. It is discretionary and not an automatic waiver or a fixed reduction.

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