Pan masala, tobacco manufacturers may have to pay Rs 1 lakh penalty for packing machines not registered under GST.
Pan masala and tobacco manufacturers that do not register their packing machines with goods and services tax (GST) authorities may face a penalty of Rs 1 lakh per machine. Further the machine could also be confiscated by the GST department.
To this effect, the Finance Bill, 2024, which was tabled along with the Interim Budget 2024-25, has introduced a section 122 in the Central Goods and Services Tax Act in a bid to improve compliance in the evasion prone sector.
“Notwithstanding anything contained in this Act, where any person, who is engaged in the manufacture of goods in respect of which any special procedure relating to registration of machines has been notified under section 148, acts in contravention of the said special procedure, he shall, in addition to any penalty that is paid or is payable by him under Chapter XV or any other provisions of this Chapter, be liable to pay a penalty equal to an amount of Rs 1 lakh for every machine not so registered,”said the section.
In addition to the penalty, every machine not so registered shall be liable for seizure and confiscation, it further said.
However, the machine will not be confiscated if the penalty is paid and the machine is registered within three days of the receipt of communication of the order of penalty.
Sanjay Kumar Agarwal, Chairman, Central Board of Indirect Taxes and Customs said that the regulations for this have already been notified.“However, the provision of the penalty will come into effect from a date to be notified later. That date will depend on when states pass a similar law in their own assemblies under their respective state GST Acts,” he said.
Based on a decision by the GST Council, the CBIC had in January this year notified a special procedure for registering packing machines and filing returns by pan masala and tobacco manufacturers.
All such manufacturers would have to furnish the details of the packing machines that are used for filling of packages on the GST portal within 30 days of the notification coming into effect or by May 1, 2024.
Further, any person planning to manufacture such products would also have to register and provide details of the packing machines within 15 days of the grant of registration. Upon furnishing these details, a unique registration number would be generated for each such machine.