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

Sundaram Foods Ltd. was earlier allowed to compound an offence under clause (c) of section 132(1) of the CGST Act, 2017. It is now accused of a fresh offence under clause (d) of section 132(1) and wants to compound it. Which statement is correct under section 138(1)?

The company cannot compound again. Section 138(1) bars anyone who has already been allowed to compound once for any offence under clauses (a) to (f), (h), (i) and (l) of section 132(1). The bar covers the whole group of clauses, so the new offence under clause (d) does not escape it.

  1. AIt can compound again, since the new offence is under a different clause
  2. BIt can compound again only if it pays 100% of the tax involved
  3. CIt cannot compound, as it has already been allowed to compound once for offences in clauses (a) to (f), (h), (i) and (l)Correct
  4. DIt can compound only if prosecution has not been instituted

Explanation

The proviso to section 138(1) bars a person who has been allowed to compound once in respect of any of the offences in clauses (a) to (f), (h), (i) and (l) of section 132(1). The bar covers that whole group, not a single clause. Both clause (c) and clause (d) fall in this group, so a different clause does not help.

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