Quantum of penalty :

Section 66(1) Provides that any taxable person who has committed any of the offences mentioned in para 1.2 above shall be punished with a penalty that shall be higher of the following amounts

• The amount of tax evaded, fraudulently obtained as refund, availed as credit, or not deducted or collected or short deducted or short collected, or

• A sum of Rs.10,000/-

Section 66(3) provides for levy of penalty extending to Rs.25,000/- for any person who

• aids or abets any of the 21 offences,

• deals in any way (whether receiving, supplying, storing or transporting) with goods that are liable to confiscation,

• receives or deals with supply of services in contravention of the Act,

• fails to appear before an authority who has issued a summon,

• fails to issue any invoice for a supply or account for any invoice required to be issued under law.

Section 66(2) provides that any registered taxable person who repeatedly makes a short payment of tax shall be a liable to penalty which will be the higher of

• 10% of the tax short paid, or

• Rs.10,000.

The said sub-section explains that three short payment in respect of three returns during any six consecutive tax periods shall be considered as repeated short payment for the purpose of levy of penalty.

Section 67 of the Model Law provides that any person who contravenes any provision of the Act or the rules made under this Act for which no separate penalty has been prescribed shall be punishable with a penalty that may extend to Rs.25,000/-

If any person transports any goods or stores any such goods while in transit without the documents prescribed under the Act (i.e. invoice and a declaration) or supplies or stores any goods that have not been recorded in the
books or accounts maintained by him, then such goods shall be liable for detention along with any vehicle on which they are being transported. Such goods may be released only after payment of the applicable tax, interest and penalty or upon furnishing of security equivalent to the said amount.

Section 8(3) provides that if a person who has opted for composition of his tax liability is found as not being eligible for compounding then such person shall be liable to penalty to an amount equivalent to the tax payable by him under the provisions of the Act i.e. as a normal taxable person and that this penalty shall be in addition to the tax payable by him.