GST- Goods and Services Tax attracts penalties for multiple offences committed by the vendor or the registered GSTIN.

Under Goods & Services ACT section [122(1)], [122(2a)], [122(2b)], [122(3)], [sec 123], [sec 124], etc multiple cases can be registered under different sections as per the offences committed by the vendor. The government is observing these cases very strictly to eliminate the vendors who are taking advantages with the older Tax reform. Some of the offences could also attract imprisonment depending upon the intensity of offence committed.

There are different penalty amounts that could be imposed it starts from 100rs, 10,000rs, 25,000rs and could be more if multiple offences are committed.

If the Returns are not filed within the due date he/ she may attract a fine of 100rs per day till the date they file the returns.

Let’s look at the different sections and learn under which section the respective offence is defined.

Under Section [122(1)] – could be up to and also full 10,000rs fine.

  1. Making a supply without invoice or with false/ Incorrect Invoice.
  2. Issuing an invoice without making supply.
  3. Not paying tax collected for a period exceeding three months.
  4. Not paying tax collected in contravention of the MGL to the credit of the Govt. for a period exceeding 3 months from the due date.
  5. Non deduction or lower deduction of tax deducted at source or not depositing tax deducted at source under section 37.
  6. Non collection or lower collection of or nonpayment of tax collectible at source under Section 43C.
  7. Availing/utilizing input tax credit without actual receipt of goods and/or services.
  8. Fraudulently obtaining any refund.
  9. Availing/distributing input tax credit by an Input Service Distributor in violation of Section 17 or relevant rules.
  10. Furnishing false information or falsification of financial records or furnishing of fake Accounts/ documents with intent to evade payment of tax.
  11. Failure to register despite being liable to be registered.
  12. Furnishing false information regarding mandatory fields for registration.
  13. Obstructing or preventing any official in discharge of his duty.
  14. Transporting goods without prescribed documents.
  15. Suppressing turnover leading to tax evasion.
  16. Failure to maintain accounts/documents in the manner specified in the Act or failure to retain Accounts/documents for the period specified in the Act.
  17. Failure to furnish information/documents required by an officer in terms of the Act/Rules or Furnishing false information/documents during the course of any proceeding.
  18. Supplying/transporting/storing any goods which he has reason to believe are liable to Confiscation.
  19. Issuing invoice or document using GSTIN of another person.
  20. Tampering/destroying any material evidence.
  21. Disposing of /tampering with goods detained/ seized/attached under the Act.

Section 122(1) provides that any taxable person who has committed any of the offences mentioned in section 122 shall be punished with a penalty that shall be higher of the following amounts:

  • The amount of tax evaded, fraudulently obtained as refund, availed as credit, or not deducted or collected or short deducted or short collected, or
  • A sum of Rs. 10,000/-

Further, Section 122(2) provides that any registered person who has not paid tax or makes a short payment of tax on supplies shall be a liable to penalty which will be the higher of:

  • 10% of the tax not paid or short paid, or
  • Rs. 10,000/-

Section 122(3) provides for levy of penalty extending to Rs. 25,000/- for any person who –

  • Aids or abets any of the 21 offences
  • Deals in any way (whether receiving, supplying, storing or transporting) with goods that are liable to confiscation
  • Receives or deals with supply of services in contravention of the Act
  • Fails to appear before an authority who has issued a summon
  • Fails to issue any invoice for a supply or account for any invoice in his books of accounts

Section 123 Respective GSTINs are required to furnish information in their return and if they fail to do so, a penalty of 100 rupees per day applies, subjected to a maximum of 5,000 rupees.

Section 124 If a person fails to furnish statistics or willfully furnishes false statistics, the following penalties apply:

  • First-time offense – 10,000 rupees
  • Continuing offense – 10,000 rupees plus 100 rupees per day (from the second day), subject to maximum of 25,000 rupees.

Section 125 of the CGST/SGST Act provides that any person who contravenes any provision of the Act or the rules made under this Act for which no separate penalty has been prescribed shall be punishable with a penalty that may extend to Rs. 25,000/-.

When Goods can be CONFISCATED?

Under Section 130 of the CGST Act, goods shall be liable to confiscation if any person:

  • Supplies or receives any goods in contravention of any provision of this Act and such contravention results in evasion of tax payable under the Act, or
  • Does not account for any goods in the manner required under the Act, or
  • Supplies goods that are liable to tax under the Act without applying for registration, or
  • Uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of CGST/SGST Act (unless used without knowledge of owner)
  • Contravenes any provision of the Act/Rules with the intention of evading payment of tax.

In terms of section 130(2), the Owner or the person in-charge of the goods liable to confiscation is to be given the option for fine (not exceeding market price of confiscated goods) in lieu of confiscation. This fine shall be in addition to the tax and other charges payable in respect of such goods.

When will a vendor be prosecuted?

Section 132 of the CGST/SGST Act codifies the major offences under the Act which warrant institution of criminal proceedings and prosecution. 12 such major offences have been listed as follows:

  1. Making a supply without issuing an invoice or upon issuance of a false/incorrect invoice.
  2. Issuing an invoice without making supply.
  3. Not paying any amount collected as tax for a period exceeding 3 months.
  4. Availing or utilizing credit of input tax without actual receipt of goods and/or services.
  5. Obtaining any fraudulent refund.
  6. Evades tax, fraudulently avails ITC or obtains refund by an offence not covered under clause (a) to (e).
  7. Furnishing false information or falsification of financial records or furnishing of fake accounts/ documents with intent to evade payment of tax.
  8. Obstructing or preventing any official in the discharge of his duty.
  9. Dealing with goods liable to confiscation i.e. receipt, supply, storage or transportation of goods liable to confiscation.
  10. Receiving/dealing with supply of services in contravention of the Act.
  11. Tampers with or destroys any material evidence or documents.
  12. Failing to supply any information required of him under the Act/Rules or supplying false information.
  13. Attempting to commit or abetting the commission of any of the offences at (a) to (l) above.
Offence Involving: Punishment(Imprisonment Extending Up To)
Tax evaded exceeding Rs. 5 crore or repeat offender 250 lakh 5 years and fine
Tax evaded between Rs. 2 crore and Rs.5 crore 3 years and fine
Tax evaded between Rs.1 crore and Rs.2 crore 1 years and fine
• False records
• Obstructing officer
• Tamper records
6 months

In terms of Section 132(4) and 132(5) of CGST/SGST Act

  • All offences where the evasion of tax is less than Rs.5 crores shall be non-cognizable and bailable,
  • All offences where the evasion of tax exceeds Rs.5 crores shall be cognizable and non-bailable.

Paying GST on time is the only way you could avoid the penalty. Do not be subjected to penalties, file your Returns in time using enComply- GST Return Filing Solution. Generate GST Compliant Bills using uGST Billing Software that makes your work easy and simple.


Content Courtesy:

Krishna Sriteja.D

GST Content Specialist | Tax Technology Enthusiast

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