02 January, 2016

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Penalties, Prosecution, Imprisonment & Compounding of Offence under Delhi VAT (DVAT) Act, 2004

Penalties, Prosecution, Imprisonment & Compounding of Offence under Delhi VAT (DVAT) Act, 2004
 
Chapter XIII of DVAT Act, 2004 deals with Penalties and Offences under the Act. Below is the List of Penalties that are imposable under the Act. Post the penalties we shall discuss the provisions related to Cognizance and Compounding under the Act.
 
Note:- 1) For Below Purpose "tax deficiency" means the difference between the tax properly payable by the person in accordance with the provisions of this Act and the amount of tax paid by the person in respect of a calendar month {Section 86(10)}
Note 2) :- Where two or more penalties arise under this Act in respect of the same conduct of a person, the person shall be liable to pay only the greater penalty. {Section 86(3)}

Penalties Due to Non-Compliance of Provisions
S.No. Section Cause of Penalty Quantum of Penalty
1. 86 ( 4 ) Fail to Apply Registration Rs.1000 per day maximum upto One Lakh
2. 86 ( 5 ) Fail to furnish Amendment Application Rs.200 per day maximum upto ten thousand
3. 86 ( 6 ) Fail to apply for cancellation of registration as required u/s 22 (2) or fails to surrender certificates of registration required u/s 22 (7) (Amended Vide Notification Dated 14th July, 2015) Rs.200 per day maximum upto twenty five thousand
4. 86 ( 9 )
  1. Fails to furnish return by due date or
  2. Fails to furnish with a return any other document that is required to be furnished with the return or
  3. Fails to furnish revised return by the due date or
  4. Fails to comply with a requirement in a notification issue u/s 70.
Rs.200 per day maximum upto fifty thousand.
If Delay in Both VAT & CST returns the above penalty shall Double.
5. 86 (13) Fails to prepare the prescribed or notified records and accounts; Fails to retain the prescribed or notified records at the principal place of business as recorded in his certificate of registration etc.. Penalty a sum of fifty thousand or twenty percent of the tax deficiency if any whichever is greater.
6. 86 (14) Non compliance with the requirement u/s 59(2), 59(3) of the Act
 
(Failure to Provide DP-1 shall be Covered here)

Penalty Rs.50000.00
7. 86 (15) Prepares Records and Accounts in a manner that is false, misleading or deceptive. Penalty Rs.one lakh or the amount of tax deficiency, if any, whichever is greater.
8. 86 (16) Issued Tax Invoice or Retail Invoice with incomplete or incorrect particulars or has failed to account it (Tax or Retail Invoice) correctly in his books of account. Rs.5000 or twenty per cent of the tax deficiency.
9. 86 (17) A person issues Tax Invoice for which he is not authorized. Penalty Rs.one lakh or the amount of tax deficiency, if any, whichever is greater.
10. 86 (18) Non compliance of Section 49 i.e. fails to submit Audited Balance Sheet upto stipulated time. Penalty equal to one percent of turnover or one lakh rupees whichever is less.
11. 86 (19) For Transporter – Being carried goods without the documents or without proper and genuine documents. Penalty 20% for the value of such goods.
12. 86 (20) A person makes a statement to the Commissioner which is false, misleading or deceptive or omits from a statement without which the statement is false, misleading or deceptive. Penalty rupees fifty thousand or the amount of tax deficiency whichever is greater.
13. 86 (21) Casual Dealer not applied for Registration within stipulated period. Penalty rupees five thousand per day subject to maximum upto rupees one Lakh.
14. 86 (22) Casual Dealer fails to furnish the return by the due date or fails to furnish documents required to be furnished with the return. Penalty rupees one thousand per day subject to maximum upto twenty five thousand rupees.
15. 86 (23) A person in any capacity organizes any exhibition-cum-sale in Delhi and fails:-
(a)   to furnish about goods brought or kept in stock or sold by any participant before or during or after the exhibition-cum-sale; or
(b)   to ensure that all such participants have obtained registration under the Act and paid due tax; or
(c)    to permit inspection of the business premises or goods or account and records of the participants; or
(d)   to permit inspection of the accounts and records of the organizer in respect of the exhibition-cum-sale.



Penalty rupees fifty thousand or a sum equal to the amount of tax payable on such goods if such goods were sold in Delhi, whichever is greater.
16. 86 (24) Residuary section – Any contravention under any of the provisions of the Act or Rules for which no penalty is separately provided under the Act. Penalty rupees ten thousand.
17. 87 (5) The penalty has not been remitted in full after objection and the person is subsequently assessed to a further penalty in respect of the same or a substantially similar failure occurring on another occasion, the penalty otherwise due under this Act shall be increased by ( i ) on first subsequent offence, fifty percent of the specified penalty and
( ii ) on second and any further subsequent offence, one hundred percent of the specified penalty.
18. 95 Non compliance of section 95 in regard of not providing name of Manager, IEC Code and PAN Penalty rupees fifty thousand subject to a maximum of fifty thousand rupees.

Penalties Due to Tax Deficiency
S.No. Section Cause of Penalty Quantum of Penalty
1. 86 (7) Falsely represent himself as a registered dealer Amount of tax wrongly collected or one lakh whichever is the greater.
2. 86 (8) Voluntary Registered Dealer failed to undertake activities within the period in his application or has failed to comply with any of the restrictions or conditions subject to which such (voluntary) registration was granted. Rs. Ten thousand
3. 86 (10) Furnishes return a false, misleading  or deceptive in material or
Omits from a return furnished any matter or thing without which the return is false, misleading or deceptive in material.
Ten thousand or amount of the Tax Deficiency whichever is the greater.
4. 86 (11) A dealer claims Tax Credit for which he is not entitled or claimed greater tax credit than is allowed. Amount equal to Tax Credit or ten thousand which is greater
5. 86 (12)* If Tax Deficiency arisen Penalty amount One percent of the Tax Deficiency per week or rupees one hundred week, whichever is higher, for the period of default.


Reduction & Waiver of Penalty

* Section 87(3) :- If the person voluntarily discloses to the Commissioner in writing the existence of the tax deficiency after the Commissioner informs the person that an audit of the person's tax obligations is to be carried out the amount of the penalty due shall be reduced by fifty per cent of the penalty

* Section 87(4) :- No Penalty u/s 86(12) if the tax deficiency arises by complying the Determination Order u/s 84 or Ruling of Commissioner u/s 85

Note :- If Penalty u/s Section 86 (irrespective of the nature but of tax deficienct) is applicable and the person voluntarily discloses to the Commissioner, in writing, the existence   of the tax deficiency, during the course of proceedings under section 60 and makes payment of such tax deficiency within three working days of the conclusion of the said proceedings; the amount of the penalty otherwise due, against the admitted and paid tax, shall be reduced by eighty per cent.

Offences Liable for Imprisonment under the Act
(1) Whoever            
 
(a)  not being a registered dealer, falsely represents that he is or was a registered dealer at the time when he sells or buys goods;
 
(b)  knowingly keeps false account or does not keep the account of the value of the goods bought or sold by him in contravention of section 48,; or
 
(c)  issues to any person a false invoice, bill, cash-memorandum, voucher or other document which he knows or has reason to believe to be false;
 
shall, on conviction, be punished with rigorous imprisonment for a term which may extend to six months and with a fine.
 
     (2)  Whoever knowingly -
           (a)  furnishes a false return;
           (b)  produces before the Commissioner, false bill, cash-memorandum, voucher, declaration, certificate, tax invoice or other document for claiming deduction on tax credit; or
           (c)  produces false accounts, registers or documents or knowingly furnishes false information;
      shall -
                (i)   in case where the amount of tax which could have been evaded if the false return, bill, cash-memorandum, voucher, declaration, certificate, tax invoice or other document for claiming deduction on tax credit, accounts, registers or documents or false information, as the case may be, had been accepted as true exceeds fifty thousand rupees, on conviction, be punished with rigorous imprisonment for a term which may extend to six months ; and
 
               (ii)    in any other case, with rigorous imprisonment for a term which may extend to six months and with a fine.
 
     (3)  Whoever, willfully attempts, in any manner whatsoever, to evade payment of tax, penalty or interest or all of them under this Act, shall, on conviction, be punished -
 
          (a)    in any case where the amount involved exceeds fifty thousand rupees during the period of a year, with rigorous imprisonment for a term which may extend to six months and with a fine; and
 
          (b)   in any other case, with rigorous imprisonment for a term which may extend to three months and with a fine.
 
     (4)  Whoever -
 
          (a)    carries on business as a dealer without being registered in willful contravention of sub-section (1) of section 18 of this Act;
           (b)   fails without sufficient cause to furnish any information required under section 21 of this Act;
  
          (d)   fails without sufficient cause to furnish any returns as required under section 27 of this Act by the date or in the manner prescribed;
           (e)    without reasonable cause, contravenes any of the provisions of section 40 of this Act;
           (f)     without sufficient cause fails to issue invoice as required under section 50 of this Act;
           (g)    fails without sufficient cause, when directed so to do under section 48 of this Act to keep any accounts or record, in accordance with the directions;
 
          (h)    fails without sufficient cause, to comply with any requirements made of him under 1[sections 58, 58A or 59] of this Act, or obstructs any officer making inspection or search or seizure under sections 60 and 61 of this Act;
 
           (i)      obstructs or prevents any officer performing any function under Chapter X of this Act;
           (j)     being owner in charge of a goods vehicle fails, neglects or refuses to comply with any of the requirements contained in section 61 of this Act; or
           (k)   interferes with or obstructs the Commissioner or any officer exercising any other power conferred under this Act;
shall, on conviction, be punished with imprisonment for a term which may extend to six months and with a fine.
 
     (5)  Whoever aids or abets any person in the commission of any act specified in sub-sections (1) to (3) of this section shall, on conviction, be punished with rigorous imprisonment which may extend to six months, and with a fine.
 
     (6)  Whoever commits any of the acts specified in sub-sections (1) to (5) of this section and the offence is a continuing one under any of the provisions of these sub-sections, shall, on conviction, be punished with a fine of not less than one hundred rupees per day during the period of the continuance of the offence, in addition to the punishments provided under this section.
 
(7) Notwithstanding anything contained in sub-sections (1) to (5) of this section, no person shall be proceeded under these sub-sections, if
 
(a) the total amount involved is less than two hundred rupees during the period of a year; or
 
(b) the person has voluntarily disclosed existence of tax deficiency under sub section (6) of section 87 of the Act.]

Offence by Manager of Registered Dealer

Where a dealer is accused of an offence specified in sub-sections (1), (2) or (3) or in clauses (a), (b), (c), (d), (e), (f), (g), (h) and (i) of sub-section (4), or sub-section (6) of this section the person deemed to be the manager of the business of such dealer under section 95 shall also be deemed to be guilty of such offence, unless he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission thereof.

90.  Offences by Companies and HUF
 
(1)  Where an offence under this Act or the rules has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
 
Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
 
     (2)  Notwithstanding anything contained in sub-section (1) of this section, where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
 
Explanation: For the purpose of this section -
           (a)  "company" means a body corporate, and includes a firm or other association of individuals; and
           (b) "director" in relation to a firm means a partner in the firm.
 
     (3)  Where an offence under this Act has been committed by a Hindu undivided family, the Karta thereof shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
 
Provided that nothing contained in this sub-section shall render the Karta liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence:
 
Provided further that where an offence under this Act has been committed by a Hindu undivided family and it is proved that the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of any adult member of the Hindu undivided family, such member shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
 
93. Compounding of offences.-
 
    (1)  The Commissioner may, before the institution of proceedings for any offence punishable under sub-section (4) of section 89 of this Act or under any rules made under this Act, accept from any person charged with such offence by way of composition of offence, a sum not exceeding fifty thousand rupees or a sum not exceeding three times the amount of tax which would thereby have been avoided, whichever is higher.
 
    (2)  On payment of such sum as may be determined by the Commissioner under sub-section (1) of this section, no further proceedings shall be taken against such person in respect of the same offence.

Disclaimer :- Only for Information Purpose. Refer to the Act and Rules before any interpretations and actions based thereon.


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