Guide to apply for Compounding of Offence under GST

Compounding of offence means paying off monetary compensation instead of undergoing prosecution. It is a kind of settlement between the taxpayer and the department to avoid criminal proceedings. It leads to the dropping of prosecution proceedings and further no penalty can be charged for the same offence.

Steps to apply for Compounding of an Offence under GST

Step 1: Log in to the GST portal and navigate to Dashboard> Services> User services> My Applications.

Step 2: On the ‘My Applications’ page, select the application type as ‘Compounding Application’ and then click on the ‘New Application’ button.

The ‘Compounding Application’ page will be displayed.

Provide details in the following fields:

• Whether order for initiation of prosecution has been filed?

If ‘yes’: Enter the prosecution notice number and click on the search button. The prosecution details at 2, 3 and 4 will get auto-populated. Skip to point 5.

If ‘no’: Provide the order reference number in ‘Any other order against which prosecution is contemplated?’. Here, the taxpayer needs to fill in the details.

• Provisions violated under the Act:

Select the one or more of the applicable cases as given in the above screenshot.

• Amount of evasion:

Enter the amount under respective major and minor heads.

• Period of offence:

Enter the ‘From’ and ‘To’ dates.

• Details of whether it is a first offence or not:

Select ‘Yes’ or ‘No’. If yes, proceed to point 6, but if ‘no’, then provide details of previous cases in 250 characters and then proceed.

• Whether any proceedings for the same offence is contemplated under any other law?

Select ‘Yes’ or ‘No’. If yes, provide details of previous cases in 250 characters and then proceed. If not, then proceed to upload documents.

• Upload supporting documents:

This is an optional field. If required, an applicant can upload a supporting document.

• Declaration checkbox:

Select the checkbox and enter verification details. Select the name of the authorised signatory and place.

Step 4: Click on the preview button to preview the application in Form GST CPD-01 and then click proceed to file. A warning message will pop up. Click on proceed to file.

Step 5: Submit with DSC or EVC.

An application reference number is generated as follows:

Frequently Asked Questions on Compounding of an Offence under GST

When can a taxpayer file an application for compounding of offence?

The prosecution is instituted: When an order for initiation of prosecution has been issued against the taxpayer.

The prosecution is contemplated: When the taxpayer is voluntarily filing this application for Compounding of Offence.

What changes occur on the GST portal on filing GST CPD-01?

The taxpayer’s dashboard gets updated with the record of filed applications.

Status of application changes to ‘Compounding Application Submitted’

The application will now show up in the concerned authority’s queue for subsequent action to be taken.

What happens on the GST portal if the concerned authority accepts or rejects the application?

The dashboard of the taxpayer and tax official gets updated with the record of the issued order.

Status of the ARN changes to :

• Compounding allowed – If the authority accepts the application.
• Compounding rejected – If the authority accepts the application.

What is the procedure for conducting compounding proceedings?

The general process is as follows:

• The taxpayer files an application in Form GST CPD-01.
• The concerned authority examines the form and issues hearing notice to the prosecution.
• The taxpayer can file a reply to the issued notice or can appear on the day of the scheduled hearing.
• On the date of hearing, the concerned authority may either issue an Adjournment Notice to the taxpayer with details of a new date, place and time of hearing or issue an order allowing or rejecting the application.

Can a taxpayer submit a rectification request against the compounding order?

Yes, in case of apparent error, a taxpayer can file a rectification request within three months of the order.