GST Non-Compliance: An offence that can attract Penalties & Imprisonment

GST Non-Compliance: An offence that can attract Penalties & Imprisonment

GST Non-Compliance An offence that can attract Penalties & Imprisonment

The GST law is out with some clear instructions which must be adhered to. Any violation could lead to adverse consequences and heavy penalty. It’s specifically important for Taxation Professionals, CAs and business owners. To keep tax evasion and corruption at bay, GST has come up with some stringent action against offenders who are subject to penalty, arrest and prosecution.


Some of the penalties and consequences under the Central Goods & Services Tax Act 2017.

There exist 21 offences under GST, which are subject to a fine/penalty of Rs. 10,000 or more depending on the tax amount. Below mentioned are some of the major offences under GST Act.

  • Supplying goods and/or services without issuing an invoice and/or issuing a wrong/incorrect invoice.

  • Providing a bill without supplying goods and/or services.

  • Collecting tax but failing to submit it to the government within 3 months.

  • Collecting full or part input tax credit without having the original bill of the goods/services.

  • Obtaining tax refund by fraudulent means.

  • Producing false financial records to file a false return.

  • Providing incorrect information during the registration.

  • Failing to deposit tax returns to the government.

  • Failing to provide proper information to the CGST/SGST or providing fraudulent information.

  • Providing an invoice with the identification of another person.

In any of the above cases under Sec.122 failing to provide correct information will be liable to pay penalties up to Rs. 25,000.

The Central Goods and Services Tax Act (CGST) considers reducing the penalty in cases where failure to pay the tax owed, than by indulging in providing fraudulent information. In such situation, the penalty is reduced
by 10% and a minimum amount of Rs. 10,000 must be paid.

Also, if a person fails to furnish correct information or willfully provides false information, he is subjected to the following penalties. If the offence is done for the first time, a penalty of Rs. 10,000 is applicable. For repeated offences, a penalty of Rs. 10,000 is imposed along with Rs.100/day subject to a maximum penalty of Rs. 25,000.


In case any of the above-mentioned offence is committed, penalty is applicable under GST.

Penalty for Late filing

Late filing is subjected to fine called late fee, which is Rs. 100 per day per Act. It sums up to Rs 200 per day, Rs.100 under CGST & Rs. 100 under SGST. However, there is no penalty for IGST for late filing. Besides
late fee, an interest of 18% must also be paid annually, which must be calculated by the taxpayer.

Penalty for not filing

If you have missed filing any GST return, then you are not eligible to file the subsequent returns. For instance, if you have no filed GSTR-2 return for the month of August, then you are not eligible to file the following GSTR-3B return for September. One late filing leads to several other subsequent consequences and heavy fines.

Confiscation of Goods

Some offences will lead to both a penalty & seizure of goods. Some of the offences include:

  • Failing to account for the goods, for which the person is accountable to pay tax.

  • Sending and/or receiving goods by breaching rules, with an intention to avoid tax.

  • Providing goods/services which are not registered and taxable.

  • Using a medium to transport and deliver taxable goods by breaching the rules.

Period of imprisonment

The period of imprisonment depends on the type of offence and the amount of tax evaded.

  • If the offence committed exceeds Rs. 500 lakhs (or Rs. 5 Cr), to avoid tax, then the imprisonment duration is 5 years which includes fine and is non-bailable.

  • If the offence committed exceeds Rs.200 lakhs (or Rs. 2 Cr), to avoid tax, then the imprisonment duration is 3 years along with penalty.

  • If convicted of any other offence exceeds Rs. 100 lakhs (or Rs. 1 Cr), then imprisonment duration is 1 year along with penalty.

Several organizations put forth their opinion regarding non-compliance of GST to take subtle action as compared to imprisonment. Hence, a taxpayer must be cautious and transparent in order to avoid penalty and/or punishment for violating GST rules. To avoid the cumbersome process of penalty and imprisonment, a taxpayer must abide by the rules under GST. A taxpayer must seek guidance from GST Council to stay compliant with GST