Today’s post would be covering discussion on Section 122(1)(v) of CGST Act, 2017. The relevant clause read as under-
“(1) Where a taxable person who––
(v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax
Nature of Default covered by the Section
- Fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51-Sub-section (1) of Section 51 mandates for deduction of tax in certain circumstances. If the taxable person fails to deduct tax in accordance with the provisions of section 51, taxable person would be said to have committed an offence under the given clause.
- Deduction of an amount which is less than the amount required to be deducted under the sub-section (1) of section 51:- Taxpayer is required to deduct tax under sub-section (1) of section 51 of CGST Act, 2017. If the taxable person deducts tax which is lesser than the amount required to be deducted, taxpayer would said to have committed an offence under the given clause.
- Fails to pay to the Government under sub-section (2) of Section 51 of CGST Act, 2017, the amount deducted as tax-If the taxable person after deducting tax fails to pay the amount to the Government under sub-section (2) of section 51 of CGST Act, 2017, the taxable person would have said to have committed an offence under the given clause.
Meaning of the tern “Fail”
As per Bouvier’s Law Dictionary, the term “fail” has been defined as “to leave unperformed”; to omit; to neglect; as distinguished from refuse, which latter involves an act of the will, while the former may be an act of inevitable necessity.
No Time limit provided in the clause for the act of non-deduction or short deduction or failure to pay be treated as an offence
Unlike Section 122(1)(iii) wherein failure to the pay the amount collected as tax is treated as an offence only beyond the period of three months from the date on which such payment becomes due; Section 122(1)(v) treats failure to pay the amount deducted as tax as an offence if the same is not paid by the due date. Therefore, no additional time limit has been provided as has been provided under Section 122(1)(iii) and 122(1)(iv).
No intent to evade tax required to be proved for identifying that whether offence has been committed or not The offence provided in the clause is for failure to deduct or deduction of an amount lower than amount required or failure to pay to the government. There is no intent of mens-rea being incorporated into the offence under Clause 122(1)(v) and a simple failure to pay the tax deducted or short deduction or lesser deduction might amount to offence under the clause without the intent to evade tax being there.