Chapter VIII OFFENCES AND PENALTIES

1. (1) Any VAT dealer who fails to apply for registration as required under Section 17 before the end of the month the application was due and applies during the subsequent month shall be liable to pay a penalty of Rs.5,000/-.(Rupees Five Thousand only.)
2. (2) Any dealer who fails to apply for registration as required under Section 17 before the end of month subsequent to the month in which the obligation arose shall be liable to pay penalty of 25% of the amount of tax due prior to the date of the registration by the Registering Authority. There shall be no eligibility for input tax credit for sales made prior to the date from which the registration is effected.
3. (3) Any dealer who fails to notify any change in the circumstances as required under the provision of the Act or the rules made thereunder, or who fails to apply for cancellation of registration as required under Section 19 shall be liable to a penalty of Rs.2,000/- (Rupees Two thousand only) for each offence:

Penalty for failure to file a return

1. (1) Any VAT dealer, who fails to file a return where no tax is due, by the end of the month in which it was due, shall be liable to pay a penalty of Rs.2,500/-(Rupees two thousand five hundred only).
2. (2) Any dealer registered under sub-section
3. (7) of Section 17 who fails to file a return where no tax is due shall be liable to pay a penalty of Rs.500/-. (Rupees five hundred only).
4. (3) Where a dealer files a return, after the last day of the month in which it is due, he shall be liable to pay a penalty of fifteen percent of the tax due:

Penalty for failure to pay tax when due

1. (1) Where a dealer who fails to pay tax due on the basis of the return submitted by him by the last day of the month in which it is due, he shall be liable to pay tax and a penalty of ten percent of the amount of tax due: Provided that before levying such penalty the authority prescribed shall give the dealer a reasonable opportunity of being heard.
2. (2) If a dealer pays the tax, penalty and interest under sub-section
3. (1) and subsequently it is found that the tax is not due, then such tax, penalty and interest shall be refunded to that dealer.

1. (1) Where an assessment is made under the provisions of sub-section
2. (1) of Section 21 for the failure to file a return, a penalty of fifty percent of the assessed amount shall be imposed.
3. (2) Where an assessment has been made under sub-section
4. (1) of Section 21, and the dealer subsequently furnishes a return for the period to which the assessment relates, the authority prescribed may withdraw the assessment but the dealer shall be liable to pay penalty under sub-section
5. (3) of Section 50 and interest as applicable.

1. (1) Where any dealer has under declared tax, and where it has not been established that fraud or willful neglect has been committed and where under declared tax is:- i) less than ten percent of the tax, a penalty shall be imposed at ten percent of such under-declared tax. ii) more than ten percent of the tax due; a penalty shall be imposed at twenty five percent of such under-declared tax.
2. (2) Where any dealer, prior to the detection by any authority prescribed,

voluntarily declares that tax due for a tax period is under declared and he pays

the tax due along with interest, no penalty shall be imposed provided that such declaration is made within the time limit and in the manner prescribed.

1. (3) Any dealer who has under declared tax, and where it is established that fraud or willful neglect has been committed he shall be liable to pay penalty equal to the tax under declared; besides being liable for prosecution:

Penalty for Failure to use or misuse TIN & GRN Any dealer who is registered under Section 17 and who fails to use a TIN or GRN or misuses a TIN or GRN contrary to the requirements of this Act or rules made thereunder, shall be liable to pay a penalty of Rs. 1000/- (Rupees one thousand only) for each offence:

Penalty for failure to issue a tax invoice and for the use of false tax invoices

1. (1) Any VAT dealer, who fails to issue a tax invoice or an invoice or a bill or cash memorandum as required by Sections 14 and 41 shall be liable to pay a penalty of Rs. 5000/- (Rupees five thousand only) or 100% of the tax whichever is lower, for each offence.
2. (2) Any VAT dealer, who issues a false tax invoice or receives and uses a tax invoice, knowing it to be false, shall be liable to pay a penalty of 200% of tax shown on the false invoice.
3. (3) Any TOT dealer or any other dealer who fails to issue a bill or cash memorandum as required by Section 41 shall be liable to pay a penalty of Rs.250/- (Rupees two hundred and fifty only):

Penalty for failure to maintain records Any VAT dealer or TOT dealer who fails to maintain proper records in accordance with the provisions of the Act, is liable to pay a penalty at the rate of Rs.5,000/- (Rupees five thousand only) for each subsequent offence committed after a warning is issued in writing for the first offence, without prejudice to the payment of tax, penalty and interest if any due under the provisions of the Act: Provided that before imposing such penalty the authority shall give the dealer a reasonable opportunity of being heard.

1. (1) No dealer shall collect any sum by way of tax, in respect of sale or purchase of any goods which are not liable to tax under the Act.
2. (2) No person, other than a dealer, shall collect on the sale or purchase of any goods any sum by way of tax from any other person and no dealer shall collect any amount by way of tax at a rate or rates exceeding the rate or rates at which he is liable to pay tax under the provisions of the Act.
3. (3) Nothing in sub-section
4. (2) shall apply to a person where he is required to collect separately any amount of tax under the provisions of any other law for the time being in force.
5. (4) If any person collects tax in contravention of the provisions of sub-section
6. (1) or
7. (2) any sum so collected shall be forfeited either wholly or partly to the Government and in addition he shall be liable to pay a penalty of an amount equal to the amount of tax so collected: Provided that the authority prescribed shall not levy penalty if it is evident that due to bonafide mistake the dealer collected tax in contravention of sub-section
8. (1) or
9. (2) and the tax so collected in excess has been remitted to the Government along with the tax payable for that month: Provided further that the authority prescribed shall while imposing the penalty or forfeiture, take into consideration the amounts refunded to the purchaser from out of the amounts collected, by way of tax in contravention of sub-section
10. (1) or
11. (2) or for the refund of which satisfactory arrangement has been made.
12. (5) No order for the forfeiture under this section, shall be made after the expiration of three years from the date of collection of the amount referred to in sub-section (4): Provided that in computing the said period of three years, the period during which any stay order was in force or any appeal or other proceeding in respect thereof was pending shall be excluded.
13. (6) If the authority prescribed in the course of any proceeding under the Act, or otherwise has reason to believe that any person has become liable to penalty with or without forfeiture of any sum under sub-section
14. (4) such authority shall serve on such person a notice requiring him on a date and at a place specified in the notice to attend and show cause why a penalty with or without forfeiture of any sum as provided in sub-section
15. (4) shall not be imposed on him.
16. (7) The authority prescribed shall thereupon hold an enquiry and shall make such order as he thinks fit.
17. (8) No prosecution for an offence under this Section shall be instituted in respect of the same facts on which a penalty has been imposed.

Any dealer or person who fails to comply with the requirements under Sections 14, 16, 17, 21, 29, 42, 43, 64, or any other provisions of the Act shall on conviction be punishable with imprisonment for a term which may extend to three months or with fine or with both.

Any dealer who obstructs the authority prescribed in the performance of his duties under the Act shall on conviction be punishable with imprisonment for a term which shall not be less than one month but which may extend to six months and with fine.

1. (1) Where an offence under the Act 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 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.

1. (2) Notwithstanding anything contained in sub-section (1), where an offence under the 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, association or persons or body of individuals whether incorporated or not; and
   • (b) ‘Director’ in relation to a firm means a partner in the firm, and in relation to any association of persons or body of individuals, means any member controlling the affairs thereof.

1. (1) The authority prescribed may accept , from any dealer who has committed an offence under the Act by way of composition of such offence:-
   • (a) where the offence consists of the evasion of tax, in addition to such tax, a sum of money equal to the amount of tax subject to a minimum of Rs.3,000/-(Rupees Three thousand only) and,
   • (b) in other cases a sum of money not exceeding Rs. 3,000/-(Rupees Three thousand only).
2. (2) Any order passed or proceeding recorded by the authority prescribed under sub- section
3. (1) shall be final and no appeal or application for revision shall lie therefrom.

1. (1) No Court other than the Court of a Magistrate of the First Class shall take cognizance of, or try, an offence under the Act.
2. (2) No prosecution for any offence under the Act shall be instituted except with the written consent of the Commissioner.

1. (1) An authority prescribed or an appellate or revising authority or an inspecting authority or any officer of the Commercial Taxes Department not lower in rank than an Assistant Commercial Tax Officer shall, for the purposes of the Act, have all the powers:-
   • (a) to summoning and enforcing the attendance of any person and examining him on oath or affirmation; and
   • (b) compelling the production of any document.
2. (2) Without prejudice to the provisions of any other law for the time being in force, where a person to whom a summon is issued either to attend to give evidence, or produce accounts, registers, records or other documents at a certain place and time intentionally omits or fails to attend or produce accounts, registers, records or other documents at such place or time the authority or officer mentioned in sub-section
3. (1) may after giving the person concerned a reasonable opportunity of being heard impose upon him by way of penalty a sum not exceeding five hundred rupees as it or he thinks fit.
4. (3) Any officer of the Commercial Tax Department, not lower in rank than an Assistant Commercial Tax Officer shall have powers to call for such information, particulars or records as he may require from any person for the purpose of assessment, levy and collection of tax under the Act.

1. (1) Any authority prescribed or appellate or revision authority may by

writing, require any person or authority to furnish such information,

particulars or records available with the person or authority as will be useful or

relevant to any proceeding under the Act.

1. (2) The person or authority from whom such information, particulars or records are required under sub-section
2. (1) shall furnish, within a reasonable time, the information particulars or records available.

Save as otherwise expressly provided in the Act, no Court shall entertain any suit, or other proceeding to set aside or modify, or question the validity of any assessment, order or decision made or passed by any officer or authority under the Act or any rules made there under, or in respect of any other matter falling within its scope.

Any person who is entitled to appear before any authority other than the High Court in connection with any proceedings under the Act, may be represented before such authority :-

1. (a) by his relative or a person regularly employed by him, if such relative or person is duly authorized by him in writing in this behalf; or
2. (b) by a legal practitioner; or
3. (c) by a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949; or
4. (d) by a Cost Accountant within the meaning of the Cost and Works Accountant Act of 1959.
5. (e) Subject to such conditions as may be laid down by the rules in that regard by a person who was enrolled as a Sales Tax Practitioner by such authority on payment of such fees and possessing such qualification as may be prescribed. If such Chartered Accountant or Cost Accountant or Sales Tax Practitioner is duly authorised in writing in this behalf.