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Penalty provisions under GST

Any breach of law/ act is an offence. Accordingly, punishment for committing an offence is ‘Penalty’. The present article covers the provisions relating to penalty under Goods and Services Tax (i.e., GST).

Offences punishable under section 122(1) of the CGST Act-

The list of offences punishable under section 122(1) is summarized hereunder-

• Fake/ wrong invoices-
  • Supply of goods or services without the actual issue of invoice or issuing an incorrect invoice or false invoice,
  • Issues invoice without actual supply of goods or services, and
  • Issues invoice/ document using the registration number of another registered person.
• Furnishing of false information/ return-
  • Furnishes false information while obtaining GST registration or subsequently,
  • Fails to furnish the information/ document called by the officer or furnishes false information/ document to the officer, and
  • Fails to keep/ maintain/ retain books of account or other documents.
• Evasion of tax-
  • Suppress turnover with the intention to evade tax,
  • Amount collected as a tax not paid to Government within a period of three months, and
  • Amount collected as tax, in contravention of provisions of the CGST Act, not deposited with the Government within a period of three months. 
• Offences relating to TDS and TCS-
  • Failure to deduct TDS or failure to deduct appropriate TDS as per section 51,
  • Failure to collect TCS or failure to collect appropriate TCS as per section 52,
  • Fails to deposit the amount deducted as TDS to the Government, and
  • Fails to deposit the collected TCS to the Government.
• Miscellaneous-
  • Avails/ utilizes input tax credit (ITC) without actual receipt of goods/ services,
  • Obtains tax refund fraudulently,
  • Avails/ distributes input tax credit in contravention of provisions of section 20 (i.e., input service distributor),
  • Produces fake accounts/ documents or furnishes false information/ return to evade tax,
  • Fails to obtain GST registration,
  • Furnishes false information at the time of obtaining GST registration or subsequent thereof,
  • Tampers/ destroys material evidence/ document,
  • Supplies/ transports/ stores goods which are liable to confiscation,
  • Disposes of/ tampers with the detained, seized or attached goods,
  • Transports taxable goods without the cover of the specified document,
  • Obstructs/ prevents the officer from discharging his duty.

For any of the above offences, the defaulter will be liable to pay higher of the following amount as a penalty-

1. INR 10,000; or
2. Amount of tax evaded/ TDS not deducted or short deducted/ TCS not collected or short collected/ tax not paid/ input tax credit wrongly availed or passed on/ fraudulently refund claimed.

Penalty for tax not paid or short paid or erroneously refunded or input tax credit wrongly availed/ utilized [Section 122(2)]-

In case there is a supply of goods or services on which tax is not paid or short paid or erroneously refunded or there is wrong availment / utilization of input tax credit, the defaulter would be liable to pay penalty as under-

Particulars	Amount of penalty
Evasion is on account of fraud/ willful misstatement/ suppression of facts	Higher of the following- INR 10,000; or Amount of tax due.
Evasion is on account of any other reason	Higher of the following- INR 10,000; or 10% of the amount of tax due.

Penalty for aiding/ abetting for evading the tax [Section 122(3)]-

Under the following cases, the person aiding/ abetting will be penalized up to a maximum amount of INR 25,000-

• Aiding/ abetting for any of the offences listed in section 122(1) (refer above),
• Possessing/ concerning/ removing/ transporting/ concealing/ supplying/ dealing with goods which are liable to confiscation,
• Receives/ concerns/ deals with the supply of service which is in contravention of any of the provisions of the Act,
• Fails to issue an invoice or fails to account for an invoice in the books of account, and
• Fails to appear, post issuance of summon, before the central tax officer.

Penalty towards failure to furnish information return under section 150 [Section 123]-

In case the person fails to furnish the information return as required under section 150 within the stipulated time. Then such person will be liable to pay a penalty of INR 100 per day till the failure continues. However, the maximum amount of penalty will not exceed INR 5,000.

Penalty for non-furnishing or wrong furnishing of information/ return [Section 124]-

Provisions of section 124 cover the following offence-

• Failure to furnish information/ return as required under section 151; or
• Willfully furnishes wrong information/ return as required under section 151.

Here, the defaulter will be penalized as under-

• Fine up to the maximum amount of INR 10,000; and
• In case of continuous offence, a further fine will be payable up to a maximum of INR 100 per day till which the failure continues. Here, the maximum amount of penalty should not exceed INR 25,000.

General penalty [Section 125]-

Any contravention/ offence which is not separately covered under any of the provisions of the act will be covered under section 125. Accordingly, the defaulter will be liable to pay a penalty maximum up to INR 25,000.

Late fee for late furnishing of GST returns [Section 47]-

As per provisions of section 47(1), in case the registered person fails to furnish GST return within a specified time period, the person will be liable to pay an amount of late fee of INR 200 per day (INR 100 per day under CGST + INR 100 per day under SGST). However, the maximum amount of late fee will not exceed INR 5,000 per return.

However, as per section 47(2), if the registered person fails to furnish an annual return within the due date. Then, such a person will be liable to pay an amount of late fee of INR 200 per day (INR 100 per day under CGST + INR 100 per day under SGST). However, the maximum amount of late fee will not exceed the quarter percentage of the person’s turnover in the state/ union territory. 

Penalty for release of goods and conveyance under detention or seizure [Section 129]-

If any person transports any goods in contravention of this Act or rules, then such goods and conveyance shall be liable to detention or seizure and shall be released on payment of below penalty-

A) Where owner comes forward for payment of tax & penalty

a) In case of taxable goods

- Penalty equivalent to 100% of tax + applicable tax

b) In case of exempted goods

- Penalty equivalent to 2% of the value of goods or INR 25,000, whichever is less

B) Where owner does not come forward for payment of tax & penalty

a) In case of taxable goods

- Penalty equivalent to 50% of value of goods + applicable tax

b) In case of exempted goods

- Penalty equivalent to 5% of the value of goods or INR 25,000, whichever is less

nice article.
PLEASE PROVIDE OPTION TO DOWNLOAD IN PDF FORMAT - as they do in taxguru.com

Replied to m-murali

There is print icon at top on right side

nice article.
Post the article related to only Section 129 & 130 with judgements. If the detaining officer not complied with the provisions and also not issued an order of detention. Pls Post the complete article on this.

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