A Presentation on

Offences an Penalties
Submitted To
Prof.Shewta Mehta

Submitted By
Rahesh Sutariya Roll no.98

Types of tax offences

Absolute liability offences Failing to keep the books and documents as required by law, failure to provide information (including tax returns and forms) to Inland Revenue, and failure to issue a tax invoice within 28 days after a request is made, are absolute liability offences. The penalties for conviction of an absolute liability offence are up to: $4,000 for a first offence $8,000 for a second offence $12,000 for any subsequent offence

 Knowledge offences Knowingly breaching a tax obligation may result in a conviction for several offences. Such offences include knowingly: If you didn't have the information requested, or failed to make or account for schedular payments (formerly withholding payments) for reasons beyond your control, you won't be prosecuted. The penalties on conviction for knowledge offences are up to: $25,000 for a first offence $50,000 for a later offence.

 Evasion and similar offences Certain actions are regarded as evasion offences if they are done either to: evade the assessment or payment of tax by yourself or anyone else, or obtain a refund or payment of tax in the knowledge that you're not lawfully entitled to it, or enable someone else to obtain a refund or payment of tax in the knowledge that the other person isn't lawfully entitled to it. Criminal offences relating to evasion include knowingly intending to evade tax by: not keeping legally required books and documents not providing information, including tax returns and forms, when required to do so providing altered, false, incomplete or misleading information, including tax returns and forms not making a legally required deduction or withholding of tax.

 Offences relating to court orders We can seek a court order to obtain information necessary for fulfilling our statutory obligations. Anyone convicted of failing to comply with such a court order may be sentenced to imprisonment for up to three months, or fined up to $1,000. Obstruction Obstructing Inland Revenue in carrying out its lawful duties, or in exercising its lawful powers, is an offence. The penalty on conviction for obstruction is up to: $25,000 for the first offence $50,000 for subsequent offences.

 Aiding or abetting It is an offence to aid or abet someone else to commit an offence. Conviction will result in the same penalty as that for the person who committed the principal offence. Employees and officers An employee, agent or officer of a taxpayer commits an offence if they were responsible for that taxpayer committing an offence. The employee will face a penalty if the principle offence was: caused by an action or omission of the employee, or with the employee's knowledge, or evasion committed by the employee.

Service Tax Penalties

The Finance Act, 1994 provided for the imposition of penalties in the following cases when the assessee:
fails to pay service tax to the Government in time. fails to file half-yearly return with the department in time or. fails to obtain registration u/s. 69. wilfully suppresses or conceals the value of taxable service or furnishes inaccurate value of such taxable service.

 The Finance Bill 2004 has substantially enlarged the scope of Section 78 of the Finance Act, 1994 by clearly elucidating the evasion on grounds of :
Fraud. Collusion. Evasion. Wilful misstatement. Suppression of facts, or any contravention under the parts or the rules.

 Section 79 provides for imposing a penalty for failure to comply with the notice issued to assessee under Section 71. It is the duty of the assessee to produce any accounts, documents or other documents, etc., as the Superintendent of Central Excise may call for the purpose of verification of the Service Tax return filed by the assessee. The jurisdiction to initiate the penalty under Section 79 vests with the Assistant or Deputy Commissioner of Central Excise. Thus, for failure to comply with the provisions of Section 71 in respect of self-assessment and verification of tax assessed by the assessee, the penalty leviable is
a maximum of 10% and/or a maximum of 50% or not more than 50%

 Service Tax Penalties For Non-registration

The penalty for non-registration is Rs 500 if the Assessee fails to make an application for registration for Service Tax. (Sec 75A)

Penalty For Late Payment Of Service Tax

The penalty for late payment of service tax is simple interest at the rate of 24% p.a. by which crediting of tax or any part thereof is delayed. (Sec. 75). Further, the Finance Act, 2002 has proposed to reduce the rate of interest from 24% p.a. to 15% p.a. for the period for which the payment of Service Tax is delayed.

 Panalty For Failure To Pay Service Tax

Penalty for failure to pay service tax is as follows:In addition to paying Service Tax and interest U/S 75, not less than Rs 100/- but which may extend to Rs 200/- for every day during which the failure continues (Sec 76). However, the penalty should not exceed the amount of Service Tax that the assessee has failed to pay.

 Panalty For Failure To Furnish Return

The penalty for this may extend to an amount not exceeding Rs 1000/- (Sec 77).

Penalty For Suppressing The Amount Of Taxable Services

The penalty for this is as follows:-In addition to Service Tax and interest a sum, which shall not be less than but which shall not exceed twice the amount ofService Tax that is sought to be evaded (Sec 78).

Penalty For Failure To Comply With Notice Of Penal Demand

For this, the penalty is a sum not less than 105 but which shall not exceed 50% of the amount of Service Tax that would have been avoided (Sec 79).

Thank You