Topic guide · 23 provisions

Offences & Penalties

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Penalties under GST fall into tiers. Ordinary compliance failures attract fixed or percentage penalties. Deliberate evasion – fake invoices, credit taken without receiving goods, tax collected and not paid – attracts penalty equal to the tax, and above certain thresholds it becomes a criminal matter.

Prosecution and arrest powers exist and are used, but they are threshold-based: the amounts involved have to cross prescribed limits before the more serious categories apply. Below those thresholds it stays a civil, monetary matter.

Compounding is the pressure valve. It allows a prosecutable offence to be settled on payment of a compounding amount, closing criminal proceedings – though it is not available for every offence or every repeat.

The jump from tax-linked penalty to criminal exposure is driven by intent and amount, not by how late you were.

Worked example

Collected but not deposited – the worst category to be in

GST collected from customers	₹14,00,000	Charged on invoices, received in bank
Amount deposited with government	₹0	Used for working capital instead
Exposure	Tax + equal penalty + interest, plus prosecution risk	Not treated as mere delay

Money you collected as tax was never yours to use. This is treated far more seriously than being unable to pay your own tax, and ‘cash flow was tight’ is not a defence to it.

The mistakes that cost people money

Not theoretical risks — the ones we actually see land on clients’ desks.

Using collected GST as working capital. It converts a payment problem into an evasion allegation.

Assuming a small amount cannot become criminal. The category depends on the nature of the act as well as the sum.

Ignoring a summons. Non-appearance is itself an offence, quite apart from the underlying matter.

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Offences & Penalties — the complete guide

10 pages covering all 23 provisions, with the plain-language explanation and practice notes for each. Print it, keep it, share it with your accountant.

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Every provision on offences & penalties

All 23 of them, each with a plain-language explanation and the full legal text.

CGST Act, 2017 · 20

Section 122 Penalty for certain offences Section 122A Penalty for failure to register certain machines used in manufacture of goods as per special procedure Section 122B Penalty for failure to comply with track and trace mechanism Section 123 Penalty for failure to furnish information return Section 124 Fine for failure to furnish statistics Section 125 General penalty Section 126 General disciplines related to penalty Section 127 Power to impose penalty in certain cases Section 128 Power to waive penalty or fee or both Section 128A Waiver of interest or penalty or both relating to demands raised under section 73, for certain tax periods. Section 129 Detention, seizure and release of goods and conveyances in transit Section 130 Confiscation of goods or conveyances and levy of penalty Section 131 Confiscation or penalty not to interfere with other punishments Section 132 Punishment for certain offences Section 133 Liability of officers and certain other persons Section 134 Cognizance of offences Section 135 Presumption of culpable mental state Section 136 Relevancy of statements under certain circumstances Section 137 Offences by companies Section 138 Compounding of offences

CGST Rules, 2017 · 3

Rule 162 Procedure for compounding of offences Rule 163 Consent based sharing of information Rule 164 Procedure and conditions for closure of proceedings under section 128A in respect of demands issued under section 73

Reading is free. Getting it wrong isn’t.

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