Offences by companies
Section 137, CGST Act
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Section 137 makes the persons in charge of a company/firm (and, on proof, directors/partners) liable for offences committed by the company, unless they prove due diligence.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
The person in charge of and responsible to the company for the conduct of its business is liable, unless he proves the offence was committed without his knowledge or that he exercised all due diligence.
A director, manager, secretary or other officer is liable where the offence was committed with his consent or connivance or is attributable to his neglect – so the prosecution must plead a specific role, not just the designation.
How this provision is built
The skeleton, clause by clause — useful when a notice cites a specific sub-clause.
The exact words of the law
1,806 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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(1) Where an offence committed by a person under this Act is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(3) Where an offence under this Act has been committed by a taxable person being a partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust, the partner or karta or managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section
(2) shall, mutatis mutandis , apply to such persons.
(4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. Explanation .-For the purposes of this section,-
(i) " company " means a body corporate and includes a firm or other association of individuals; and (ii) "director " , in relation to a firm, means a partner in the firm.
High Court cases on this section
Judgments in our index that cite this provision. Being listed does not make a case good law — it may have been appealed or distinguished since. Read it before relying on it.
SANDEEP SINGHAL S/O SHRI SHIV SHANKAR v. DIRECTORATE GENERAL OF CENTRAL GOODS AND SERVICES TAX INTELLIGENCE
Read the judgment PDF →
LAKSHYA AGARWAL S/O SHRI KRISHNA KUMAR AGARWAL v. DGGI JAIPUR ZONAL UNIT
Read the judgment PDF →
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2017-07-01 · Commenced
Provision as originally enacted in the CGST Act, 2017 (Act 12 of 2017) and brought into force w.e.f. 01-07-2017.
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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