CHAPTER – XIX
OFFENCES AND PENALTIES
85. Offences and penalties
(1) Where a taxable person who –
(i) supplies any goods and/or services without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
(ii) issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder;
(iii) collects any amount as tax but fails to pay the same to the credit of the appropriate Government beyond a period of three months from the date on which such payment becomes due;
(iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the credit of the appropriate Government beyond a period of three months from the date on which such payment becomes due;
(v) fails to deduct the tax in terms of sub -section (1) of section 46 , 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 credit of the appropriate Government under sub-section (2) thereof, the amount deducted as tax;
(vi) fails to collect tax in terms of sub-section of section 56 , 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 credit of the appropriate Government under subsection 0 thereof, the amount collected as tax;
(vii) takes and/or utilizes input tax credit without actual receipt of goods and/or services either fully or partially, in violation of the provisions of this Act, or the rules made thereunder;
(viii) fraudulently obtains refund of any CGST/SGST under this Act;
(ix) takes or distributes input tax credit in violation of section 21, or the rules made thereunder;
(x) falsifies or substitutes financial records or produces fake accounts and/or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
(xi) 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 the 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 there under;
(xvii) fails to furnish information and/or documents called for by a CGST/SGST officer in accordance with the provisions of this Act or rules made there under or furnishes false information and/or documents during any proceedings under this Act;
(xviii) supplies, transports or stores any goods which he has reason to believe are liable to confiscation under this Act;
(xix) issues any invoice or document by using the identification number of another taxable person;
(xx) tampers with, or destroys any material evidence;
(xxi) disposes off or tampers with any goods that have been detained, seized, or attached under this Act;
shall be liable to a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted or short deducted or deducted but not paid to the Government or tax not collected under section 56 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, as the case may be, whichever is higher.
(2) Any registered taxable person who supplies any goods or services on which any tax has not been paid or short -paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilized for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten percent of the tax due from such person, whichever is higher.
(3) Any person who
(a) aids or abets any of the offences specified in clauses (i) to (xxi) of sub-section (1) above;
(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 reason to believe are liable to confiscation under this Act or the rules made there under;
(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 reason to believe are in contravention of any provisions of this Act or the rules made there under;
(d) fails to appear before the CGST/SGST officer, when issued with a summon for appearance to give evidence or produce a document in an enquiry;
(e) fails to issue invoice in accordance with the provisions of this Act or rules made thereunder, or fails to account for an invoice in his books of account;
shall be liable to a penalty which may extend to twenty five thousand rupees.
86. General penalty
Any person, who contravenes any of the provisions of this Act or any rules made there under 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 .
87. General disciplines related to penalty
(1) No tax authority shall impose substantial penalties for minor breaches of tax regulations or procedural requirements. In particular, no penalty in respect of any omission or mistake in documentation which is easily rectifiable and obviously made without fraudulent intent or gross negligence shall be greater than necessary to serve merely as a warning.
Explanation.- For the purpose of this sub-section –
(a) a breach shall be considered a ‘minor breach’ if the amount of tax involved is less than five thousand rupees.
(b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on record.
(2) The penalty imposed shall depend on the facts and circumstances of the case and shall be commensurate with the degree and severity of the breach.
(3) No penalty shall be imposed on any taxable person without giving a notice to show cause and without giving the person a reasonable opportunity of being
(4) The tax authority shall ensure that when a penalty is imposed in an order for a breach of the laws, regulations or procedural requirements, an explanation is provided therein to the persons upon whom the penalty is imposed, specifying the nature of the breach and the applicable law, regulation or procedure under which the amount or range of penalty for the breach has been prescribed.
(5) When a person voluntarily discloses to a tax authority the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the tax authority, the tax authority may consider this fact as a potential mitigating factor when quantifying a penalty for that person.
(6) The provisions of this section shall not apply in such cases where the penalty prescribed under the Act is either a fixed sum or expressed as a fixed
88. Power to impose penalty in certain cases
Where the proper officer is of the view that a person is liable to a penalty and the same is not covered under any proceeding under sections 59, 60, 61, 62, 66, 67 , 89 or 90, he may issue an order levying such penalty after giving a notice and after giving a reasonable opportunity of being heard to such person .
89. Detention, seizure and release of goods and conveyances in transit
(1) Where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or rules made there under, all such goods and the conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyances shall be liable to detention or seizure and after detention or seizure, shall be released ,-
(a) on payment of the applicable tax and penalty equal to one hundred percent of the tax payable on such goods, where the owner of the goods comes forward for payment of such tax and penalty;
(b) on payment of the applicable tax and penalty equal to the fifty percent of the value of the goods reduced by the tax amount paid thereon, where the owner of the goods does not come forward for payment of such tax and penalty.
(c) the proper officer detaining or seizing goods and/or conveyances shall issue a notice specifying the tax payable and thereafter, pass an order for payment of tax and penalty under clause (a) or (b), as the case may be.
(2) On payment of the amount referred to in sub-section (1), all liabilities under this section shall stand discharged in respect of such goods and such conveyance.
(3) where the person transporting any goods or, as the case may be, the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention, further proceedings shall be initiated in terms of section 90 and provisions of sub-section (6) of section 79, shall apply mutatis mutandis for provisional release of the detained goods or conveyances.
PROVIDED that where the detained goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer.
90. Confiscation of goods and/or conveyances and levy of penalty
(1) If any person –
(i) supplies or receives any goods in contravention of any of the provisions of this Act or rules made thereunder with intent to evade payment of tax; or
(ii) does not account for any goods on which he is liable to pay tax under this Act; or
(iii) supplies any goods liable to tax under this Act without having applied for registration; or
(iv) contravenes any of the provisions of this Act or rules made there under with intent to evade payment of tax; or
(v) uses any conveyance as a means of transport for carriage of taxable goods in contravention of the provisions of this Act or rules made there under unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,
then, all such goods and / or conveyance shall be liable to confiscation and the person shall be liable to penalty under section 85.
(2) Whenever confiscation of any goods or conveyance is authorized by this Act, the CGST/SGST officer adjudging it shall give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized or the owner or the person in-charge of the conveyance, an option to pay in lieu of confiscation such fine as the said officer thinks fit:
PROVIDED that such fine shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:
PROVIDED FURTHER that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub -section (1) of section 89:
PROVIDED ALSO that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.
(3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any tax and charges payable in respect of such
(4) No order of confiscation of goods and/or conveyance and/or imposition of penalty shall be issued without serving a notice on such person requiring him to show cause and without giving the person a reasonable opportunity of being heard.
(5) Where any goods and/or conveyance are confiscated under this Act, the title of such goods and/or conveyance shall thereupon vest in the appropriate
(6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every Officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.
(7) The proper officer may, after satisfying himself that the confiscated goods and conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose such goods and/or conveyances and deposit the sale proceeds thereof with the Government.
91. Confiscation or penalty not to interfere with other punishments
No confiscation made or penalty imposed under the provisions of this Act or the rules made there under shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of this Act or under any other law.