Amendment in GST: Insertion of New Section 122A Prescribing Penalty, Seizure & Confiscation for Non-Registration of Machines by Tobacco Product manufacturers
In a significant amendment to combat revenue leakage in the tobacco products manufacturing sector, the Finance Bill 2024 has introduced a stringent provision under the CGST Act. As of April 1, 2024, tobacco product manufacturers, those dealing with pan masala, gutka, and similar items, must register their packing machinery with GST authorities to avoid penalties up to Rs 1 lakh per unregistered machine.
Penalty Structure u/s. 122A(1)
As per Sub-Section (1) of the newly inserted section 122A in the CGST Act, a penalty of Rs. 1 lakh is leviable for every packing machine not registered by a tobacco product manufacturer. This penalty applies to contraventions of special procedures related to machine registration under section 148.
Seizure and Confiscation u/s. 122A(2)
Apart from the financial penalty, unregistered machines are also liable for seizure and confiscation, as outlined in sub-section (2) of section 122A.
Exemption Provision
A provision allows for the non-confiscation of machines if the penalty is paid, and registration is completed within three days of receiving the penalty order.
Effective Date
The enforcement of this new provision comes into effect from April 1, 2024, giving manufacturers a window to ensure compliance.
Background
The amendment follows the recommendation of the GST Council, which last year introduced a special procedure for machine registration by tobacco manufacturers.
According to that special procedure, the tobacco product manufacturers are required to furnish details of existing and newly-installed packing machines, including their capacity, using Form GST SRM-I.
But there was no penalty associated with machine non-registration. However, considering the need to reduce non-compliance in the tobacco product manufacturing sector, the Council decided to impose penalties and thus this amendment in the act has been introduced by inserting the new section 122A, which prescribed for penalty of 1 lakh for non-registration of each machine by a tobacco product manufacturer.
Provisions under Section 148 of CGST Act
Section 148 empowers the government, based on Council recommendations, to notify special procedures for certain classes of registered persons, including those related to registration, return filing, tax payment, and administration.
Conclusion
The amendment aims to enhance compliance within the tobacco manufacturing sector and curb revenue loss. Manufacturers are urged to adhere to the new registration requirements to avoid substantial penalties and potential confiscation of packing machinery. Stay informed and ensure timely compliance from April 1, 2024 with the latest regulations to safeguard your business interests.
To Access the Insertion of New Section 122A in Finance Bill 2024 (Ref. Clause-13 of Chapter-IV) CLICK HERE
To Access the Related CBIC Notification 4/2024 (New Reporting Procedure for Tobacco Mfr) CLICK HERE
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