Under the Central Goods and Services Tax (CGST) Act 2017, a penalty for non-compliance with GST regulations may be imposed under different provisions which range from section 122 to section 130 of CGST Act 2017. Generally the penalty under GST Law is imposed in the following ways:
- Late filing penalty: If a registered person fails to furnish a GST return by the due date, a late filing penalty of Rs. 50 per day (for CGST and SGST) will be imposed subject to a maximum amount of 0.25% of the taxpayer’s turnover in the relevant state or union territory.
- Penalty for failure to take registration under GST: If a person is liable to register for GST but fails to do so, a penalty of Rs. 10,000 or an amount equal to the tax evaded (whichever is higher) will be imposed.
- False or incorrect return penalty: If a registered person files a GST return that is false or incorrect, a penalty of Rs. 10,000 or 10% of the tax due (whichever is higher) may be imposed.
- Other penalties: The CGST Act also provides for penalties for other offenses, such as failure to issue a GST invoice, failure to pay GST owed, or obstruction of tax authorities. The penalty for such offenses may be up to Rs. 25,000.
The imposition of a penalty under GST laws follows the due process specified under the Act, involving assessment, notice, appeal, and payment. The penalty amount will depend on the nature and severity of the offense committed by the taxpayer.
Penalty under section 122 of CGST Act
Penalty under GST (Section 122 of CGST Act) is imposed for certain specified offenses which are as under:
(i) Supply of any goods or services or both without issue of any invoice or issues an incorrect or false invoice
(ii) Issuance of any invoice or bill without supply of goods or services or both in violation of the provisions of this Act
(iii) Collection of any amount as tax but fails to pay the same to the Government beyond a period of three months from due date
(iv) collection of 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 due date
(v) Failure to deduct the tax in accordance with the provisions of section 51, or deducts an amount which is less than the amount required to be deducted or where he fails to pay to the Government the amount deducted as tax
(vi) Failure to collect tax in accordance with the provisions of section 52, or collects an amount which is less than the amount required to be collected or where he fails to pay to the Government the amount collected;
(vii) Takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially
(viii) Fraudulently obtains refund of tax under this Act;
(ix) Takes or distributes input tax credit in contravention of section 20
(x) 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
(xi) Person is liable to be registered under this Act but fails to obtain registration;
(xii) Furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
(xiii) Obstructs or prevents any officer in discharge of his duties under this Act;
(xiv) Transports any taxable goods without the cover of documents as may be specified in this behalf;
(xv) suppresses his turnover leading to evasion of tax under this Act;
(xvi) 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) 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) Supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
(xix) 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,
The penalty for these offenses may be a sum of Rs. 10,000 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 under Section 52.
In addition, if the offense is committed by a company or a partnership firm, the person responsible for the conduct of its business may also be penalized.
The penalty under GST provisions under section 122 is imposed after following the due process of law, including issuance of show cause notice, hearing of the taxpayer, and consideration of the taxpayer’s explanation. The penalty under GST will depend on the nature and severity of the offense committed by the taxpayer.
Penalty under section 123 of CGST Act
Penalty under GST Law for one hundred rupees for each day of the period during which the failure to furnish such return continues subject to maximum of rupees five thousands may be imposed to a person who is required to furnish an information return under section 150 fails to do so within the period specified in the notice.
Penalty under section 125 of CGST Act
Penalty under section 125 of CGST Act is a general penalty which are imposed to a person who contravenes any of the provisions of this Act/rules for which no specific penalty is provided for in this Act. Penalty under this section may extend to twenty-five thousand rupees.
Penalty under section 132 of CGST Act
Section 132 of the CGST Act 2017 provides for the imposition of a penalty under GST for certain specified offenses. The offenses that attract a penalty under Section 132 include:
- Supplying goods or services without an invoice or issuing a false invoice with the intention to evade tax.
- Issuing an invoice or bill without the supply of goods or services in violation of the provisions of the Act, leading to wrongful availment or utilisation of input tax credit or refund of tax;
- Collecting GST but failing to remit it to the government within the specified time.
- Obtaining a refund of GST by means of fraud, willful misstatement or suppression of facts.
- Submitting false information while registering under the Act, or furnishing false information during the course of the proceedings.
- Tampering with or destroying any material evidence or documents or not providing relevant documents during the proceedings.
- Obstructing or preventing any officer in the discharge of his duties under the Act.
- 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 CGST Act
- 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
The penalty under GST for these offenses shall be:
- In cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five crore rupees, with imprisonment for a term which may extend to five years and with fine;
- In cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds 2 crore rupees but does not exceed 5 crore rupees, with imprisonment for a term which may extend to three years and with fine;
- In the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one crore rupees but does not exceed two crore rupees, with imprisonment for a term which may extend to one year and with fine
The penalty or prosecution under section 132 is imposed after following the due process of law, including issuance of show cause notice, hearing of the taxpayer, and consideration of the taxpayer’s explanation. The penalty amount will depend on the nature and severity of the offense committed by the taxpayer.
Author Profile
- Shiwali Shukla is a member of ICAI since 2018 & She has excelled in Chartered Accountancy & follows an innovative & talented approach towards work, She is also an Ex- Employee of Ernst & Young. She is having the Expertise in the filed of Direct Taxation, Indirect Taxation, Company Law matters & Finance. She is also having more than 3 years of Experience in the same field. & more than 3 years if Experience in the field of Direct as well as Indirect Taxation..