COMPOUNDING OF OFFENCES:
Section 320 of the Code of Criminal Procedure defines “compounding” as to forbear from prosecution for consideration or any private motive. Aiyar’s Law Lexicon defines it variously as “arranging, coming to terms; condone for money;”. Compounding is thus is a legally recognized arrangement whereby the person charged with an offence is offered the option of avoiding prosecution and imprisonment in lieu of monetary considerations by way of penalty; compounding is essentially a contract between the State and the offender whereby the State secures revenue and the offender secures immunity from prosecution.
Section 78 of the Model GST Law provides for compounding of offences. According to the proviso to sub-section (1), the following offences are not eligible for compounding:
• Offences numbered 1 to 7 of the 12 major offences (outlined in paragraph 4.2 above), if the person charged with the offence had compounded earlier in respect of any of the said offences
• Aiding/abetting offences numbered 1 to 7 of the 12 major offences, if the person charged with the offence had compounded earlier in respect of any of the said offences
• Any offence (other than the above offences)under any SGST Act/IGST Act in respect of a supply with value exceeding Rs.1 crore, if the person charged with the offence had compounded earlier in respect of any of the said offences
• Any offence which is also an offence under NDPSA or FEMA or any other Act other than CGST/SGST
• Any other class of offences or persons that may be prescribed in this behalf.
Any other offence may, upon payment of the prescribed (compounding) amount be compounded and such compounding is permissible either before or after the institution of prosecution. Compounding is to be permitted only after payment of tax, interest and penalty and compounding shall not affect any proceeding already instituted under any other law.
The lower limit for compounding amount is to be the greater of the following amounts:-
• 50% of tax involved, or
• Rs.10,000
The upper limit for compounding amount is to be greater of the following amounts:-
• 150% of tax involved or
• Rs.30,000
Sub-section (3) of section 77 provides that on payment of compounding amount:
• no further proceeding to be initiated under this Act and, criminal proceeding already initiated to stand abated.