Offences and Penalties of

GST
 Offences and Penalties – Sec 122 2
Nature of Offence Prescribed Penalty
• Supplies any goods without invoice
• Issues invoice without supply of goods
• Collects tax amount but does not pay the same into the appropriate government treasury
• Collects tax in contravention of the Act Higher of following:
• Fails to deduct or collect tax and also fails to pay it to the appropriate governments 1. Rs. 10,000/- or
• Takes input tax credit without receipt of goods 2. An amount
• Obtains refund by fraud equivalent to the
• Manipulates financial records amount of tax
• Fails to get registered evaded/not
• Gives false information deducted/collecte
• Transports taxable goods without documents d or input tax
• Fails to maintain books of accounts. credit availed or
• Fails to provide information and required documents. distributed or
• Takes or distributes credit in violation refund claimed in
• Obstructs or prevents a officer in discharge of duty the matter
• Suppresses turnover
• Tampers or destroys evidence
• Disposes or tampers goods detailed or seized etc
 Offences and Penalties – Sec 122 3
Nature of Offence Prescribed Penalty
• Non payment or short payment of tax or erroneous refund or (a) Higher of following:
wrong availment or utilisation of input tax credit by a 1. Rs. 10,000/- or
registered person 2. 10% of tax due
• (a) for reason other than fraud or any wilful misstatement or
suppression of facts (b) Higher of the following:
• (b) for reason of fraud or any wilful misstatement or 1. Rs 10,000/- or
suppression of facts 2. Tax due
• Applicable to any person who aids or abets any of the offences
specified in clauses (i) to (xxi) of sub-section 85(1); or
• Who acquires possession of, or deals with any goods which he
knows or has reason to believe are liable to confiscation; Rs. 25,000/-
• Receives any supply of services in contravention
• Fails to appear before GST officer to honour the summons;
• Fails to issue invoice or record it
 Offences and Penalties – Sec 123, 124 & 125 4
Nature of Offence Prescribed Penalty
• Failure to Furnish information return u/c 150 Rs. 100/ day for the period during
which such failure continues
Subject to maximum penalty
of Rs. 25,000
• Failure to furnish any information or return under section 151,—
• Upto Rs. 10000 fine
(a) without reasonable cause fails to furnish such information or return • in case of a continuing offence
as may be required under that section, or to a further fine which may
(b) wilfully furnishes or causes to furnish any information or return extend to Rs. 100/ day after the
which he knows to be false. first day during which the
offence continues
• subject to a maximum limit of
Rs. 25,000/-

• General Penalty – contravention of any provisions of this Act or any rules

• Upto Rs. 250000
for which no penalty is separately provided
 General Discipline related to Penalty – Sec 126 5

 No Penalty for minor breach/mistake where the tax involved is less than Rs.
5,000/- and are easily rectifiable.

 No penalty will be imposed without issuing SCN or giving personal hearing

 Penalty cannot be levied suo-moto on contravention. Reasonable explanation

needs to be provided by the Officer

 For voluntary disclosure of non-payment of tax – consideration while levying

penalty

 S-126 will not apply, where the penalty is expressly prescribed under the Act as
either a fixed sum or expressed as a fixed percentage
 Detention, seizure and confiscation of goods and
/ or conveyances – Sec 129 and 130 6
Sec Nature of Offence Repercussion
No.
129 Applicable to any person who: Detention / seizure of goods and conveyance used for
• Transports or stores any goods while in transport of goods. Can be released on
transit in violation of provision of Act; or (a) Where owner comes forward
Payment of an amount of 2% of value of goods or
twenty five thousand rupees, whichever is less, in
case of exempted goods.
Payment of tax and penalty (100% of tax) for goods
other than exempted goods, OR
(b) Where owner does not come forward
Payment of an amount of 5% of value of goods or
twenty five thousand rupees, whichever is less, in
case of exempted goods
Payment of tax and penalty (50% of value of goods-
tax paid) in other cases
(c) Security equivalent to the amount as stated in (a) or
(b)
 Detention, seizure and confiscation of goods
and / or conveyances – Sec 129 and 130 7
Sec Nature of Offence Repercussion
No
130 Applicable to any person who: All such goods and / or conveyance shall be
• Supplies / receives goods in liable to confiscation and the person shall be
contravention of any of the provisions of liable to penalty under section 122
this Act leading to evasion of tax; OR
does not account for any goods on which Option to pay fine in lieu of confiscation
he is liable to pay tax OR supplies goods
liable to tax without having applied for
the registration OR contravenes
provisions of this Act with intent to
evade payment of tax OR uses
conveyance as means of transport for
carriage of taxable goods in
contravention of this Act
 8

Prosecution and
Compounding of Offences
 Prosecution and Compounding of Offences –
Sec 132 9
Provides for power to initiate legal proceedings against the offenders who commits any of the 12
enlisted offences
Offences include clandestine removal of goods, retention of collected taxes beyond 3 months,
irregular availment or utilization of input tax credit, obtaining fraudulent refund, fabrication of
financial records, abatement etc.
Amount of Tax Evaded or ITC wrongly Period of Maximum
availed or utilised or Refund wrongly Imprisonment and
taken Fine without any specific and special
Exceeding Rs. 500 Lakhs 5 Yrs. and Fine reason as recorded in the order by
the court the term of
Exceeding Rs. 200 Lakhs upto Rs. 500 3 Yrs. and Fine theimprisonmentshouldnotbeless
Lakhs than 6 months.
Exceeding Rs. 100 Lakhs upto Rs. 200 1 Yr. and Fine All offencesarenon-cognizable
Lakhs and bailableexceptthe cases
Commits/ abets in the commission of Imprisonment up to 6 where tax evasion is more than
certain specified offences months and/ or fine Rs. 500 Lakhs.
In case of repetition of Offence 5 Yrs. and Fine
 Prosecution and Compounding of Offences –
10
Sec 134, 135, 136 and 137
 Offences under this Act to be tried only before the Court of Judicial Magistrate First Class or
above only with prior approval of designated authority. (Sec 134)
 Obligation cast on the offender to prove the absence of mens-rea, else its implied that offence
committed intentionally with guilty mind. (Sec 135)
 Statement recorded during the course of investigation or enquiry relevant to prove the
truthfulness of the facts when (Sec 136):
• Made by person not available during proceedings
• Court admits that statement as evidence after examining the person making the statement
as witness.
 Offence committed by Company : person-in-charge such as Director, Secretary, Manager etc.,
considered guilty and liable for punishment along with company (Sec 137)
 Offence Committed by Partnership Firm, Limited Liability Partnership, Hindu Undivided
Family or Trust : Partner/ Karta of Family/ Managing Trustee of the Trust deemed to be guilty.
(Sec 137)
• If proved that person was unaware or took suitable precautions to prevent offence – No
punishment
 Compounding of Offences : Sec 138 11

 Compounding is available only one time in respect of certain specified offences

 Compounding is not available for the subsequent time in respect of other offences and
offences under SGST and IGST, if in the previous compounding case, value of supplies
exceeds Rs. 1 Crore.
 A person convicted for an offence under this Act cannot apply for compounding
 A person accused of committing certain specified offences cannot apply for
compounding
 Compounding shall be allowed only after making payment of tax, interest, and penalty.
 Minimum Compounding amount = Rs. 10,000/- or 50% of tax involved whichever is
higher.
 Maximum compounding amount = Rs. 30,000/- or 150% of tax whichever is higher
 12

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