Section 122 of CGST Act 2017 provides for the offences which are liable for penal action against the offenders. This section is also equally applicable under IGST Act 2017. Section 20 of IGST Act provides the authority for application of this section along with CGST or SGST/UTGST as the case may be.
The word “penalty” has not been defined in the CGST/SGST Act but judicial pronouncements and principles of jurisprudence have laid down the nature of a penalty as:
(i) a temporary punishment or a sum of money imposed by statute, to be paid as punishment for the commission of a certain offence;
(ii) a punishment imposed by law or contract for doing or failing to do something that was the duty of a party to do.
In this article, we will go through provision of Offences and corresponding penalty.
Notified Offences directly applicable to Registered Person
Section 122(1) and 122(2) provides list of offences applicable for taxable persons who are directly involved in those offences. Section 2(107) defines “taxable person” as a person who is registered or liable to be registered under section 22 or section 24. It means Section 122(1) is equally applicable on registered as well as for those unregistered persons who are liable to registered under GST laws.
Following are the offences provided under Section 122(1) :-
(i) Invoice not issued: Any Taxable person who supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
(ii) Incorrect Invoice Issued: Any Taxable person who issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
(iii) GST Collected but not paid to Government:- Any Taxable person who collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
(iv) GST Collected without authority and not paid to Government:- Any Taxable person who collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
(v) Non-deduction or short-deduction of TDS:- Any Taxable person who 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;
(vi)Non-collection or short-collection of TCS:- Any Taxable person who fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;
(vii) Avail or utilize ITC wrongly :- Any Taxable person who takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
(viii) Obtain refunds fraudelently:- Any Taxable person who fraudulently obtains refund of tax under this Act;
(ix) Avail or distribute ITC wrongly :- Any Taxable person who takes or distributes input tax credit in contravention of section 20, or the rules made thereunder;
(x) Furnish false records/books :- Any Taxable person who falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
(xi) Failure to register under GST :- Any Taxable person who is liable to be registered under this Act but fails to obtain registration;
(xii) Registered under GST with wrong information :- Any Taxable person who furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
(xiii) Disturb any officer to take action :- Any Taxable person who obstructs or prevents any officer in discharge of his duties under this Act;
(xiv) Transportation of goods without invoice/e-way bill :- Any Taxable person who transports any taxable goods without the cover of documents as may be specified in this behalf;
(xv) Suppress Turnover :- Any Taxable person who suppresses his turnover leading to evasion of tax under this Act;
(xvi) Failure to maintain books:- Any Taxable person who fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
(xvii) Failure to furnish correct information :- Any Taxable person who fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
(xviii) Supply of Goods liable to confiscate:- Any Taxable person who supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
(xix) Invoice issued using GSTIN of other:- issues any invoice or document by using the registration number of another registered person;
(xx) tampers with, or destroys any material evidence or document;
(xxi) disposes off or tampers with any goods that have been detained, seized, or attached under this Act.
In case of above listed offences u/s 122(1), higher of following is the penalty amount liable to be paid by such offenders:-
- ten thousand rupees or
- an amount equivalent to the tax evaded or
- the tax not deducted under section 51 or
- short deducted or deducted but not paid to the Government or
- tax not collected under section 52 or short collected or collected but not paid to the Government or
- input tax credit availed of or passed on or distributed irregularly, or
- the refund claimed fraudulently
Following are the offences provided under Section 122(2) :-
| Supplies of any goods or services or both on which :- tax not paid or tax short-paid or tax erroneously refunded, or ITC wrongly availed or utilised |
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| for any reason, other than the reason of:-
fraud or any wilful misstatement or suppression of facts to evade tax |
for reason of fraud or
any wilful misstatement or suppression of facts to evade tax |
| Taxable person shall be liable to a penalty higher of:-
ten thousand rupees or ten per cent of the tax due from such person |
Taxable person shall be liable to a penalty higher of:- ten thousand rupees or the tax due from such person |
Notified Offences directly or indirectly applicable to any Person
Section 122(3) provides following list of offences applicable to those persons who are directly or indirectly involved in those offences. There shall be levied a penalty which may extend to twenty-five thousand rupees in following such offences where any person:-
(a) aids or abets any of the offences specified in clauses (i) to (xxi) (as listed above) of sub-section (1) of Section 122;
(b) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder;
(c) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;
(d) fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry;
(e) fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to account for an invoice in his books of account.
General Penalty
Section 125 of the CGST Act 2017, any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty-five thousand rupees.
