Sec 138 – Compounding of offences

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Sec 138 – Compounding of offences 2017-04-14T02:48:09+00:00

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  • Miloni ShahMiloni Shah
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    #1134 |

    (1) Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case be, of such compounding amount in such manner as may be prescribed:
    Provided that nothing contained in this section shall apply to-
    (a) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f) of sub-section (1) of section 132 and the offences specified in clause (l) which are relatable to offences specified in clauses (a) to (f) of the said sub-section;
    (b) a person who has been allowed to compound once in respect of any offence, other than those in clause (a), under this Act or under the provisions of any State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act or the Integrated Goods and Services Tax Act in respect of supplies of value exceeding one crore rupees;
    (c) a person who has been accused of committing an offence under this Act which is also an offence under any other law for the time being in force;
    (d) a person who has been convicted for an offence under this Act by a court;
    (e) a person who has been accused of committing an offence specified in clause (g) or clause (j) or clause (k) of sub-section (1) of section 132; and
    (f) any other class of persons or offences as may be prescribed:
    Provided further that any compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other law:
    Provided also that compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences.
    (2) The amount for compounding of offences under this section shall be such as may be prescribed, subject to the minimum amount not being less than ten thousand rupees or fifty per cent. of the tax involved, whichever is higher, and the maximum amount not being less than thirty thousand rupees or one hundred and fifty per cent. of the tax, whichever is higher.
    (3) On payment of such compounding amount as may be determined by the Commissioner, no further proceedings shall be initiated under this Act against the accused person in respect of the same offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated.

    Priya MadrechaPriya Madrecha
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    138.1    Introduction
    This provision deals with compounding of offences by payment of the prescribed compounding fees
    138.2    Analysis
    (a)    Compounding of an offence means payment of a sum of money in monetary terms instead of undergoing prosecution.
    (b)    Compounding of an offence is understood as a comparison between the offender and the tax department and is not an agreement or contract.
    (c)    Compounding of a offence can be either before or after institution of the prosecution proceedings.
    (d)    On payment of tax, interest and penalty a person can approach for compounding of the offence.
    (e)    Specified offences can be compounded only once.
    (f)    In specified cases compounding would be minimum of Rs. 10000/- or 50% of tax whichever is higher.
    (g)    Certain other cases envisages a compounding fee of Rs. 30000/- or 150% of tax whichever is higher.
    (h)    On payment, the proceedings indicated will abate and no criminal proceedings can be launched.
    (i)    Compounding of offences is impermissible to the following offences:
    (i)    A person who has compounded once in respect of supply value exceeding Rs.
    One Crore.
    (ii)    A person who is convicted by a Court under this Act.
    (iii)    Prescribed class of persons,
    (iv)    A person permitted to compound offences in terms of section 132.

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