Page 18 - Chap21 Offences & Penalties

though prosecution has been instituted/launched against him.
Ü On payment of compounding amount determined by the Commissioner, the criminal proceedings

that have been initiated against Ganesh Enterprises in respect of said offence, shall stand abated.
Ü The lower limit for compounding amount is 25% of the tax involved.
Ü The upper limit for compounding amount is 100% of the tax involved.

CCP 21.08.22.00
GST Department initiated prosecution proceedings against Mr. Sahil, a taxable person under
GST. Mr. Sahil collected ₹ 8 crore as GST but failed to pay the same to the Government beyond the

period of three months from the date on which such payment became due.
He approached the Commissioner on 15.10.20XX with a request for compounding of offence. Mr.
Sahil made full and true disclosure of facts relating to the case. After considering the request, the
Commissioner directed him to pay an amount of ₹ 5.2 crore as compounding amount on 20.10.20XX.
As per the provisions of section 138 of the CGST Act, 2017 read with relevant rule of the CGST Rules,

2017, examine the issue and provide the answers with supporting explanatory note to the following:
1) Determine the minimum and maximum compounding amount which can be determined by the
Commissioner.
2) Is the amount determined by the Commissioner in this case within the limits prescribed under

the GST law?
3) In what time period will Mr. Sahil have to pay the compounding amount ordered by the
Commissioner?
4) What is the consequence of the decision of the commissioner allowing the request for
compounding the offence? [CA Final Exam Nov. 18 Old similar ] [CA Final May 24 Exam]

Answer :
1) Since Mr. Sahil has collected amount exceeding ₹ 5 crores as tax but failed to pay the same to the
Government beyond a period of 3 months from the date on which such payment became due:

(i) Minimum amount for compounding is 50% of the tax evaded, i.e., ₹ 4 crore (50% of ₹ 8 crore).
(ii) Maximum amount for compounding is 75% of the tax evaded i.e., ₹ 6 crore (75% of ₹ 8 crore).
2) Yes, the amount for compounding determined by the Commissioner i.e. ₹ 5.2 crore is within the
above limits prescribed under the GST law.
3) Mr. Sahil has to pay the compounding amount ordered by the Commissioner within 30 days from

the date of the receipt of the order.
4) If the taxable person pays the compounding amount decided by the Commissioner, no further
proceedings shall be initiated under GST law against the accused person in respect of the same
offence and any criminal proceedings aIready initiated for the said offence shall stand abated.

09. Combined Questions :-
CCP 21.09.23.00

Mr. Pankaj, an unregistered person under GST, purchases the goods supplied by Mr. Raman, who
is a registered person without receiving a tax invoice from Mr. Raman and thus helps in tax
evasion by Mr. Raman. What disciplinary action may be taken by tax authorities to curb such type

of cases and on whom? [CA Final Nov 19 Exam New] [Study Mat- Similar]

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