Failure obtaining GST registeration

[VIGNESH]

Sir. what will be the penalty in case of failure to register under GST even after crossing the threshold limit. will the same change if client voluntarily register now and pay taxes before receiving nay notices? kindly reply

[KASTURI SETHI]

Failure to obtain registration despite crossing threshold limit is a very very serious lapse. All transactions will be unauthorized. Multiple penalties can be imposed upon.The department can easily invoke Section 74 of CGST Act. If registration is obtained now (without detection by the department) and pay GST along with interest, the department may take lenient view and impose minimum penalty. Such voluntary deposit of tax along with interest will prove the assessee's bona fides.See Section 126(5) in this context.

Penalty of Rs.10,000/- under Section 122 (xi) for non-registration.

Just for knowledge sake, also go through Section 67 of CGST Act in this context.

[Amit Agrawal]

Please refer to sub-section (5) & (6) of Section 73 too.

[Shilpi Jain]

I am assuming that even though registered late, tax will be paid subsequently even for those transactions along with interest. In such a case for the period where registraiton was required but not taken penalty could be liable as per section 122(1)(xi) amounting to Rs. 10k each under SGST and CGST

"is liable to be registered under this Act but fails to obtain registration"

Once taxes are paid before issue of notice, no penalty would be liable.

[KASTURI SETHI]

I agree with Madam Shilpi Jain. Taxes along with interest are to be paid before issuance of notice in order to avoid penalty.

Section 73 (8) is also worth reading in this context.

"Section 73 (8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded."

[Ravinesh Sinha]

I agree with learned experts. However the loss of tax deposited but not collected from customer may be huge. In case u collected tax without registration but deposited after voluntary registeration the penalty may be huge u/s 76 and other section for unauthorised collection of taxes

[KASTURI SETHI]

SCN can be issued under Section 76 for imposition of penalty equal to the tax evaded, if mala fide intention is proved.

AI Summary

Failing to Register for GST Can Lead to Penalties; Voluntary Compliance May Reduce Fines Under Section 122(1)(xi) A discussion on the consequences of failing to register for GST after exceeding the threshold limit highlights the seriousness of such a lapse, which can lead to unauthorized transactions and multiple penalties. If registration is obtained voluntarily before detection and taxes are paid with interest, authorities may impose a minimal penalty, demonstrating the taxpayer's good faith. Penalties under Section 122(1)(xi) could amount to Rs. 10,000 for non-registration. References are made to Sections 73, 74, and 76 of the CGST Act, emphasizing that timely tax payment can mitigate penalties and conclude proceedings. Unauthorized tax collection without registration may incur significant penalties.