Penalties Under CGST Act, 2017

Pooja Koli

Lets have a tour on penalties specified under sec 122 to sec 128 under CGST Act in an interesting manner that it will stick to our mind permanently. Where you will get versatile amount of Penalties in accordance with the various Offences under CGST ACT in a single place:

Section 122 : Penalty for certain Offences

(1) Where a Taxable Person who-

(i) Supply without invoice or supply with incorrect or false invoice;

(ii) Issuing invoice without making supply of goods/ services under this act or rules made there under;

(iii) Collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

(iv) Collects any tax in contravention of provisions of this act but fails to pay same to the Government beyond a period of three months from the date on which such payment becomes due;

(v) TDS defaults like fails to deduct the tax in accordance with provisions of sec 51(1) or less deducted than which is actually required to be deducted or fails to pay to government so deducted under sub sec(2);

(vi) TCS defaults like fails to collect the tax in accordance with the provisions of the sec 52(1) or less collects than which is actually required to be collected or fails to pay to government the amount so collected under sub section (3);

(vii) ITC defaults– take or utilization of ITC without actual receipt of goods/ services either fully or partially, in contravention of the provision of Act or rules made there under;

(viii) Fraudulently obtains refund of tax under this act;

(ix) Take or distribute ITC in contravention of section 20, or rules made there under basically deal with ISD;

(x) Falsified or substitute financial records or produce fake accounts or documents or furnishes any false information or return with an  intention to evade payment of tax under this Act;

(xi) Registration related defaults– as is liable to be registered under this act but fails to obtains registration;

(xii) Furnishes false or incorrect information either at the time of applying for registration of subsequently;

(xiii) Obstruct or prevent any officer in discharge of his duties under this act;

(xiv) Transaction related defaults– transport any taxable goods without the cover of documents as may be specified in this behalf;

(xv) Suppression of 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 provision of this act or rules made there under;

(xvii) Failure to furnishing document/ information called for – fails to furnish information or documents  called by an officer in accordance with the provisions of this Act or rules made there under or furnishes false information or documents during the proceedings under this act;

(xviii) Dealing in Goods liable to confiscation of Goods– Supplies, transport or stores any goods which he has reason to believe are liable to confiscation under this act;

(xix) Supplies with GSTIN of some other person– issue any invoice or document by using the registration number of another registered person;

(xx) Tampering with material evidence/ destroying– tampers with, or destroys any material evidence or document;

(xxi) Disposal of goods while detention, seizure is operational– Disposes off or tampers with any goods that have been detained, seized, or attached under this act,

He shall be liable to pay a penalty of TEN THOUSANDS RUPEES or an amount equivalent the tax evaded i.e., clause (x) , or the tax not deducted/ collected under sec 51/52, short deducted/ collected under sec 51/52 or deducted / collected but not paid to government under sec 51/52 or input tax credit availed of or passed on or distributed irregularly, or  the refund claimed fraudulently whichever id HIGHER.

(2) Any Registered Person Who supplies any goods or services or both on which any tax has
NOT BEEN DEDUCTED, or
SHORT DEDUCTED, or
ERRONEOUSLY REFUNDED, or
Where the INPUT TAX CREDIT has been WRONGLY availed or utilized –

(a) For the reason, other than 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 TAX DUE from such person,

whichever is HIGHER,

(b) For the reason of FRUAD or any WILFUL MISSTATEMENT or SUPPRESSION of facts to EVADE tax – shall be liable to pay a penalty or TEN THOUSAND RUPEES or 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)

(b) ACQUIRE POSSESSION of, or in way concern himself in transporting, removing, depositing, keeping, concealing, supplying or purchasing in any other manner daels with any goods which he knows or has a reason to believe are liable to confiscation under this act or rules made there under;

(c) RECEIVED or in any way CONCERNED WITH the supply of, or in any 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 rules made there under;

(d) FAILS to appear before THE OFFICER of central tax, when issued with a SUMMON for APPEARANCE to give evidence or produce a document in an inquiry;

(e) FAILS to issue AN INVOICE in accordance with the provision of this act or rules made there under 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.

Section 123 : Penalty for failure to furnish INFORMATION RETURN

If a person who is required to FURNISH an INFORMATION RETURN under section 150 fails to do so within the period specified in the notice under sub section (3) thereof (i.e., 30 days from the date of issue of SCN) ,

The proper officer may direct that such person shall be liable to pay a penalty of ONE HUNDRED RUPEES for each day of the period during which the failure to furnish such return continues :

Provided that the penalty imposed under this section shall not EXCEED FIRVE THOUSAND RUPEES.

(In short – Penalty Rs. 100/- / day subject to max Rs. 5,000/-)

Section 124 : Fine for failure to furnish STATISTICS

If any person required to furnish any INFORMATION or RETURN under section 151 –

(a) Without reasonable cause fails to furnish such information or return as may be required under that section, or

(b) Wilfully furnishes or causes to furnish any information or return which he knows to be false,

He shall be punishable with a fine ,which may EXTEND to TEN THOUSAND RUPEES for each day AFTER the FIRST DAY during which the offence continues SUBJECT to a MAXIMUM limit of TWENTY FIVE THOUAD RUPEES.

 Section 125 : General Penalty

Any person, who CONTRAVENES any of the provisions of this act or 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.

Section 126 : General discipline related to penalty

(1) No Officer under this act shall impose any penalty for MINOR BREACH of tax regulations or procedural requirement and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross  negligence.

Explanation : for the purpose of this sub section –

(a) A breach shall be considered a MINOR BREACH if the amount of TAX is LESS THAN RS.5,000/-.

(b) An omission or mistake in documentation shall be considered to be easily rectified if the same is an error apparent on the face of record.

(2) The PENALTY imposed under this act shall depend on the facts and circumstances of each case and shall be commensurate with the degree and severity of the breach.

(3) NO PENALTY shall be imposed on any person without giving him an opportunity of being heard.

(4) The officer under this act shall while imposing penalty in an order for a breach of any law, regulation or procedural requirement, specify the nature of the breach and the applicable law, regulation or procedure under which the amount of penalty for the breach has been specified.

(5) When a person voluntarily discloses to an officer under this act the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the officer under this act, the proper officer may consider this fact as a mitigating factor when quantifying a penalty for that person.

(6) The provisions of this section shall NOT APPLY in such cases where the penalty specified under this act is either a fixed sum or expresses as a FIXED PERCENTAGE.

Section 127 : 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

Section 62 or section 63 or section 64, or

Section 73 or section 74, or

Section 129 or section 130 ,

he may issue an order levying such penalty after giving a reasonable opportunity of being heard to such person.

Section 128 : Power to WAIVE penalty or fees or both

The government may, by notification, WAIVE in PART or FULL,

any PENALTY referred to in section 122 or section 123 or section 125 or

any LATE FEE referred to in section 47 (i.e., late fee is payable due to late submission of RETURN)

for such class of taxpayers and

under such mitigating circumstances as may be specified therein on the recommendation of the council.