1. Offences, Penalties and Prosecution
under GST
CA Jugal Narendra Gala

2. Research Credits
Gracelin Lita

3. Legends used in the Presentation
GST Goods and Services Tax
CGST Central Goods and Services Tax
SGST State Goods and Services Tax
UTGST Union Territory Goods and Services Tax
CG Central Government
SG State Government
GSTR Goods and Services Tax Return
GSTN Goods and Services Tax Network
IT Information Technology
VAT Value Added Tax
UIN Unique Identification Number
TDS Tax Deducted at Source
LLP Limited Liability Partnership
HUF Hindu Undivided Family

4. Presentation Schema
Introduction
Penalties for
offenses by any
Taxable person
Penalties for
offenses by a
Registered
person
Penalties for
Offence by Any
person
Penalty for failure
to furnish
Information
Return
Fine for failure to
furnish Statistics
Liabilities of
certain persons
Detention,
Seizure and
Release of goods
and conveyance
in transit
Confiscation of
goods and
conveyance
Major Offences
and Punishments
for Major
Offences
Non-cognizable
Vs. Cognizable
offense
Presumption of
Culpable mental
state
Offence by
Companies
General
disciplines
relating to
Penalty
Power to impose
penalty in certain
cases
Additional
provisions
Compounding of
Offenses

5. Introduction
Penalty is a temporary punishment imposed by law for violating the provisions of the Act
Prosecution is the institution or commencement of legal proceedings against a person
Amount of penalty to be leviable will depend upon intention of person committing the
offense
A prosecution will be instituted by classifying them into serious category or relatively less
serious category offenses
In the GST regime, there is uniform penalty and prosecution provisions for similar type of
offense
Therefore it is necessary to study the provisions of the GST law regarding Offenses and Penalties

6. Penalties for Offenses by
any Taxable Person
Section 122 of CGST Act

7. Penalty for Offenses Committed by Taxable
Persons –Sec 122(1)
• Supply without issue of invoice or issue of incorrect or false invoice
• Issue of any invoice or bill without supply of goods or services
• Failure to pay any amount collected as tax to the Government within 3 months from the date on which
payment becomes due
• Collects tax in contravention to GST Act and fails to pay such amount to the Government within 3 months
from the date on which payment becomes due
• Failure to deduct tax under Sec 51(1)* or short-deducted or fails to pay to the Government the amount
deducted as tax
*Sec 51(1) - A department of the CG/SG ,Local authority , Governmental agencies or other persons notified
by the government shall deduct TDS at 1% from the payment made to supplier if the total value of such
supply exceeds Rs.2,50,000
Penalty shall be leviable on a taxable person for the following offenses

8. Contd…
• Failure to collect tax under Sec 52(1)* or short collection made or fails to pay to the Government the
amount collected as tax
• Utilisation of ITC without actual receipt of goods or services
• Fraudulently obtained Refund of tax under GST
• Takes or distributes ITC in contravention of Sec 20**
• Falsification of financial records, documents and returns with a motive of tax evasion
*Sec 52(1) -Every Electronic Commerce Operator shall collect an amount not exceeding 1% of the net value of
taxable supplies made through it by other suppliers where the consideration is collected by the operator
**Sec 20 – Manner of distribution of credit by Input Service Distributor

9. Contd…
• Liable to be registered but fails to obtain registration
• Furnished false information during registration or subsequently
• Obstructs or prevents any Officer in discharge of his duties under this Act
• Transportation of taxable goods without the cover of the specified documents
• Suppression of turnover with an intention to evade tax
• Failure to furnish information or documents called by an officer or furnishing false information and
documents
• Supplies, transports or stores goods which are liable for confiscation
• Issues any invoice or document with the registration number of another registered person
• Tampers with or destroys any material evidence or document
• Disposes off or tampers with any goods that have been detained, seized or attached under this Act

10. Penalty for offences under Sec 122(1)
Amount of penalty shall be higher of the following
Rs.10,000 OR
An amount equivalent to any of the following as in the applicable case
• Tax evaded
• Tax not deducted under Sec 51 or short deducted or deducted but not paid to the Government
• Tax not collected under Sec 52 or short collected or collected but not paid to the Government
• ITC availed of or passed on or distributed irregularly
• Refund claimed fraudulently

11. Penalties for Offenses by
any Registered Persons
Section 122(2) of CGST Act

12. Penalty for Offences by any Registered Person
– Sec 122(2)
Any registered person who has made supply of goods or services or both on which
 Tax has not been paid or short-paid or erroneously refunded
 ITC has been wrongly availed or utilised
Intention of Offense Penalty
Other than fraud or wilful misstatement or
suppression of facts to evade tax
Higher of the following:
1) Rs.10,000 or
2) 10% of the tax due from such person
Fraud or wilful misstatement or suppression of facts to
evade tax
Higher of the following:
1) Rs.10,000 or
2) Tax due from such person

13. Penalties for Offenses by
Any Person
Section 122(3) of CGST Act

14. Penalty for Offenses committed by Any Person
- Sec 122(3)
Penalty is leviable at amount which may extend up to Rs.25,000 for any of the following offenses committed
by any person
Aids or Abets any of the offenses specified under Sec 122(1)
Acquires possession of or concerned with transporting, removing, depositing, keeping, concealing, supplying,
or purchasing goods that are liable to confiscation
Receives or concerned with the supply of services in contravention to provisions of GST Act
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
Fails to issue Invoice as per the provisions concerned or fails to account for an invoice in his books of
account

15. Penalty for Failure to Furnish Information Return
– Sec 123
Where a person has not furnished information return under Sec 150* within the specified time**, the
Commissioner may issue a notice to furnish the information return within a period not exceeding 90 days
from the date of service of notice
If the person still fails to furnish the information return:
A penalty of Rs.100/day (for the period during which the failure continues ) subject to a maximum amount of
Rs.5,000 is payable by such person
*Sec 150 – Information return is a return of the following details to be furnished by certain
persons as notified by the Government :
Record of registration
Statement of accounts
Periodic return of tax payment made
Transactions of goods or services
Transaction relating to bank account or consumption of electricity
Transaction of purchase or sale

16. Persons required to Furnish Information Return
Any Taxable Person
A Local authority or other Public Authority or Association
Any Authority of SG responsible for collection of VAT/ Sales Tax/ State Excise duty
Any Authority of CG responsible for collection of Customs duty/Excise duty
An Income Tax Authority
A Banking Company
A State Electricity Board or any electricity transmission board entrusted by CG/SG
The Registrar or Sub-Registrar as per Registration Act
A Registrar under Companies Act
A registering authority empowered to register motor vehicles
A collector referred in Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act
A Recognised Stock Exchange
A depository
A RBI Officer
The GST network
UIN holder
Any other person as may be specified by the Government

17. Fine for Failure to Furnish Statistics – Sec
124
If any person required to furnish any information under Sec 151*
Fails to furnish such information or return without reasonable cause
Wilfully furnishes false information or return
Fine which may extend up to
Rs.10,000
In case of a continuing offence,
further fine of Rs.100/day after
the first day during which the
offense continues subject to a
maximum of Rs.25,000
*Sec 151 – The Commissioner, if he considers it necessary may call upon concerned persons to collect
statistics relating to any matter dealt in connection with this Act
Eg. Statistics relating to Total number of returns filed in a month, Total number of invoices uploaded in
a quarter, etc.

18. Liability of Officers and Certain Other
Persons – Sec 133
Any person engaged in
collection of statistics under
Sec 151
Any Officer of Central Tax
having access to
information under Sec 150
Any other person engaged in
provision of service on the
Common Portal or Agent of
Common Portal
Wilfully discloses any information or the contents of any return furnished otherwise than,
In execution of his duties OR
For the purposes of prosecution for an offence
Punishment
Imprisonment for a term extending up to 6 months or with a fine up to Rs.25,000 or with both
In case of Government servant With previous sanction of Government
In case a person other than Government
servant*
With previous sanction of Commissioner
* Example: An authorised agent of the GSTN other than a Government employee who provides IT
infrastructure and services to the CG/SG and tax payers

19. Detention, Seizure and Release of Goods and
Conveyances in Transit – Sec 129
Where any person transports any goods, or stores any goods while they are in transit, in contravention of the
provisions of this Act
The following shall be liable to detention or seizure :
All such goods and conveyance used to transport the said goods
Documents relating to such goods and conveyance
Such goods/conveyance shall be detained only by an Order of Detention/Seizure served on the person
The Proper Officer shall issue a notice specifying the tax and penalty payable and pass an order for the
same .
The person concerned shall be given an opportunity of being heard before imposing any penalty
In case of consignment
If Specified document accompanied with
consignment of goods
Either the Consignor or Consignee should be
deemed to be the owner
If Specified document not accompanied with
consignment of goods
Proper Officer should determine who should be
declared as the owner of goods

20. Release of Goods and Conveyances
Where owner of the goods comes forward for
payment of applicable tax and penalty
Where owner of the goods does not come forward
for payment of applicable tax and penalty
Other than exempted
goods
1) On payment of
applicable tax and
penalty equal to
100% of the tax
payable on such
goods OR
2) Furnishing a security
equivalent to the
amount payable
Exempted goods 1) 2% of value of goods
or Rs.25,000
(Whichever is less)
2) Furnishing a security
equivalent to the
amount payable
The Goods/Conveyance after detention or seizure shall be released in the following manner
Other than exempted
goods
1) On payment of
applicable tax and
penalty equal to 50%
of the value of
goods reduced by
the tax amount paid
thereon OR
2) Furnishing a security
equivalent to the
amount payable
Exempted goods 1) 5% of value of goods
or Rs.25,000
(Whichever is less)
2) Furnishing a security
equivalent to the
amount payable

21. Contd…
The release of goods shall be made on provisional basis upon execution of a Bond in Form GST INS-04
and on payment of applicable tax and penalty or on furnishing of security – Sec 67(6)* read with Rule 140
When the person transporting such goods or the owner of the goods fails to pay the amount of tax or
penalty within 14 days of such detention or seizure further proceedings shall be initiated under Sec
130**
Where the detained goods or seized goods are perishable or hazardous in nature or may depreciate in
value with passage of time , the said period of 14 days may be reduced by the Proper Officer
**Sec 130 – Confiscation of goods or conveyances and levy of penalty
* Sec 67(6) – Powers of Inspection, Search and Seizure

22. Confiscation of Goods or Conveyances and
Levy of Penalty – Sec 130
If any person commit any of the following offenses, all goods and conveyances shall be liable to
confiscation* and he shall be liable to penalty under Sec 122**
Supplies or receives any goods in contravention of any provisions of the GST Act
Does not account for any goods on which he is liable to pay GST
Supplies any goods liable to GST without applying for registration
Contravenes any provisions with a motive to evade tax
Uses any conveyance to transport goods in contravention to GST Act (Except when the owner of the
conveyance proves that it was used without his knowledge or assistance)
*Confiscation is a legal form of seizure by the Government or other Public authority. It means transfer
of the title to the goods to the Government
**Sec 122 – Penalty for certain offenses committed by a taxable person, a registered person or any
other person (discussed before)

23. Other Provisions relating to Confiscation
Penalty shall be levied under Sec 122. Fine payable in lieu of confiscation shall be determined by the Officer
subject to the following conditions
• Amount of fine payable shall not exceed the market value of the goods confiscated less the tax chargeable
thereon
• Aggregate of fine and penalty leviable shall not be less than the amount of penalty leviable under Sec 129
When a conveyance was used on hire basis, the owner of the conveyance shall be given an option to pay an
amount equal to the tax payable on the goods transported in lieu of the confiscation
Any fine imposed in lieu of confiscation shall be in addition to any tax, penalty and charges payable in respect of
such goods or conveyance
An order for confiscation shall be imposed after giving the person an opportunity of being heard
The title of confiscated goods or conveyance shall immediately after that vest upon the Government
The Proper Officer shall take possession of the confiscated goods and conveyance with the assistance of any
Police Officer upon requisition.
The Proper Officer may dispose such goods and conveyance and deposit the sale proceeds with the Government
in the following circumstances
• Such confiscated goods or conveyance are not required in any other proceedings under the GST Act
• A reasonable time not exceeding 3 months to pay fine in lieu of confiscation has been given
Confiscation or penalty imposed under GST shall not prevent the infliction of any other punishment

24. Punishments for Specified
Offences
Section 132 of CGST Act

25. Major Offenses under the GST Act
CGST Act codifies the major offenses which warrant institution of criminal proceedings and prosecution.
Whoever commits any of the following offenses shall be punishable with the sanction of Commissioner
1 Supply of goods or services without issue of any invoice with an intention to evade tax
2 Issue of invoice or bill without supply leading to wrong availment or utilisation of ITC or Refund of Tax
3 Wrong Availment or Utilisation of ITC by issue of invoice without any supply of goods or services
4 Failure to pay any amount collected as tax to the Government within 3 months from the date on which
payment becomes due
5 Evasion of tax by fraudulent availment of ITC or refund of tax
6 Falsification of financial records or documents and information with an intention to evade tax
7 Obstructs or prevents any officer in the discharge of his duties
8 Acquires possession of or concerned with transporting, removing, depositing, keeping, concealing,
supplying, or purchasing goods that are liable to confiscation
9 Receives or concerned with the supply of services in contravention to provisions of GST Act
10 Tampers or destroys any material evidence or documents
11 Failure to supply any information when required
12 Attempts to commit or abets the commission of any of the major offenses mentioned above

26. Punishment for the Major Offenses
Offence Involved Amount involved (Rs.) Punishment
(Imprisonment of minimum of 6
months* extending to )
Any offence where the amount of
tax evaded or ITC wrongly availed
or utilised or Refund wrongly taken
More than 5 crores 5 years with fine
Exceeds 2 crores but less than or
equal to 5 crores
3 years with fine
Exceeds 1 crore but less than or
equal to 2 crores
1 year with fine
Commits or abets the Falsification
of records, Prevention of officer in
doing his duties or is Concerned
with goods liable to confiscation
NA 6 months or with fine or both
For second and every subsequent
offence under Sec 132
No limit 5 years and fine
*Imprisonment for minimum of 6 months shall be imposed in the absence of special and adequate reasons to
the contrary to be recorded in the Court’s judgment
Note: There is no separate punishment mentioned in the Act for offenses such as “Destroying material evidences”
and “Failure to supply information return”. But they attract penalty under Sec 122(1) and 123 respectively

27. Non-Cognizable Vs. Cognizable Offense
Points of Distinction Cognizable Offence Non-Cognizable Offense
Meaning A serious category offence where an Officer,
duly empowered, has authority to make an
arrest without a warrant and to start an
investigation with or without the permission
of a Court
A relatively less serious offence
where there is no authority to make
arrest without a warrant and no
authority to start an investigation
without a Court Order except under
Special Legislation
Classification Following offences where amount of tax
evaded or ITC wrongly availed or Refund
wrongly taken exceeds Rs.5 crores
All major offenses under Sec 132
except cognizable and non-bailable
offenses
1) Supply without issue of invoice
2) Issue of invoice without supply
3) Wrong availment of ITC by issue of invoice
without supply
4) Failure to pay any amount collected as tax
Bailable or Non-bailable Non-bailable offence Bailable offense

28. Presumption of Culpable Mental State – Sec
135
In any prosecution for an offence, the Court shall presume the existence of culpable mental state on
the part of the accused
Culpable state of mind is a state of mind wherein
The act is intentional
The act and its implications are understood and controllable
The person committing the act was not coerced and even overcomes hurdles to the act committed
The person believes or has reasons to believe that the act is contrary to law
If the accused takes the above as a defense stating that he has no such mental state
The fact will be proved only when the Court believes it to exist beyond reasonable doubt and not
merely when its existence is established by a dominance of probability. Thus, for any offence, it will be
assumed that the accused has culpable mental state, in case, contrary is proved by the accused

29. Offences by Companies
Section 137 of CGST Act

30. Offence Committed by a Company
Where an offense has been committed by a taxable person being a Company
Every person in charge and responsible of the
conduct of the business of the company at the time
the offence was committed
As well as the company
Shall be deemed to be guilty AND
Shall be liable to be proceeded against and punished
accordingly*
If the offense has been committed with the
consent or attributable to any negligence on part
of
Any Director/Manager/ Secretary/Any
Officer of the company
Such person shall also be deemed to
be guilty AND
Shall be liable to be proceeded against
and punished accordingly*
*Any person liable to punishment shall not be held liable 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

31. Offence Committed by a Partnership Firm/
LLP/ HUF/ Trust
Where an offense has been committed by a taxable person being a Partnership Firm/LLP/HUF/Trust
Partner/Karta/Managing partner
Shall be deemed to be guilty AND
Shall be liable to be proceeded against and punished
accordingly*
If the offense has been committed with the
consent or attributable to any negligence on part
of
Any
Partner/Member/Trustee/Manager/Secretary
/any other Officer
Such person shall also be deemed to
be guilty AND
Shall be liable to be proceeded against
and punished accordingly*
*Any person liable to punishment shall not be held liable 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

32. General Disciplines Related to Penalty – Sec
126
The levy of penalty is subject to certain disciplinary regime as follows
No penalty shall be imposed by any officer for any of the following
• Minor breaches of tax regulations (Breach where the amount of tax involved is less than Rs.5,000)
• Procedural requirements of the law
• Any omission or error or mistake in documentation made without fraudulent intent or gross negligence,
which is easily rectifiable
The penalty imposed shall depend on the facts and circumstances of each case
No penalty shall be imposed without giving the person an opportunity to be heard
The officer shall specify the nature of breach and the applicable law or regulation concerned while imposing
any penalty
When a person voluntarily discloses the circumstances of the breach , the Officer shall consider it as a
mitigating factor when quantifying the penalty
Non-applicability of Section 126
Sec 126 shall not apply when penalty is specified under this Act either as a fixed sum or expressed as a fixed
percentage under other sections(discussed before). Thus, Sec 126 shall apply only when an officer himself
imposes any penalty where he considers it necessary.

33. Power to Impose Penalty in Certain
Cases – Sec 127
Where the Proper Officer is of the view that a person is liable to a penalty and the same is not covered under
any of the following proceedings, he may issue an order levying such penalty after giving a reasonable
opportunity of being heard to such person*
Sec 62 Assessment of non-filers of Returns
Sec 63 Assessment of unregistered persons
Sec 64 Summary Assessment
Sec 73 Determination of :
Tax not paid or short paid or erroneously refunded
 ITC wrongly availed or utilized
for any reason other than fraud or willful misstatement or suppression of facts
Sec 74 Determination of:
 Tax not paid or short paid or erroneously refunded
ITC wrongly availed or utilized
by reason of fraud or willful misstatement or suppression of facts
Sec 129 Detention, Seizure and Release of Goods and Conveyances in transit
Sec 130 Confiscation of goods or conveyances
* A person covered under the proceedings mentioned above relate to offences already discussed. Sec 127 states
that penalty can be imposed by Proper Officer even when there are no proceedings open with regard to
assessment, adjudication, detention or confiscation

34. Additional Provisions
Section Provision
125 General Penalty Any person who contravenes any provisions of the GST Act for which
no penalty is separately provided , shall be liable to a penalty up to
Rs.25,000
128 Power to Waive Penalty The Government may by notification waive either fully or partly on
the recommendations of the Council
1) Any penalty under Sec 122(Penalty for certain offences), Sec 123
(Penalty for failure to furnish information return) and Sec
125(General Penalty)
2) Late fees under Sec 47( For delay in filing of return)
134 Cognizance of Offences No Court shall take cognizance* of any offence punishable under the
GST Act except with the previous sanction of Commissioner and no
Court inferior to a Magistrate of the First Class shall litigate a legal
controversy of any such offense
136 Relevancy of Statements
under certain circumstances
A statement made and signed by a person in response to a summon
issued under Sec 70 (Summon issued to give evidence and produce
documents) shall be relevant in prosecution of any offense for proof
of truth in the following circumstances
1) When the person who made the statement is dead or cannot be
found or is incapable of giving evidence or kept away by the
adverse party
2) When the person who made the statement is a witness in the
case and the Court requires the statement as evidence for justice
*Cognizance – take account of

35. Compounding of Offenses
Section 138 of CGST Act

36. What is Compounding of Offenses ?
Compounding means payment of monetary compensation or fine
instead of undergoing prosecution for an offence committed
Compounding is a sort of compromise between the offender and the
department to avoid criminal proceedings
Compoundable Offence is an offence which the law allows to be
compounded between the parties
Under GST, Compounding of Offences can be done by the
Commissioner on payment of compounding amount either before or
after the institution of prosecution, in the prescribed manner

37. Restrictions on Compounding of Offences
Compounding of Offences shall not apply to the following cases
A person who has been allowed to compound once in respect of the following specified
offenses under Sec 132
1) Supply without issue of Invoice
2) Issue of Invoice/Bill without Supply
3) Wrong availment of ITC using invoice issued without supply
4) Failure to pay any amount collected as tax to the Government
5) Fraudulently avails ITC/Refund of tax with the intention to evade tax
6) Falsification of financial records and documents with motive of tax evasion
7) Attempts to commit or abets the commission of the specified offenses mentioned above
A person who has been allowed to compound once in respect of offences other than the
specified offenses mentioned above , in respect of supplies of value exceeding Rs.1 crore
A person who has been accused of committing an offence under GST Act which is also an
offense under any other law in force

38. Contd…
A person who has been accused of committing the following offenses
1) Obstructs or prevents an officer in doing his duties
2) Destroys any material evidence or documents
3) Fails to supply information when required
A person who has been convicted for an offence under the GST Act by a Court
Any other class of persons or offences as may be prescribed
Any compounding allowed shall not affect the proceedings initiated under any other Law
Compounding shall be allowed only after making payment of tax, interest and penalty involved in
such offences

39. Monetary Limit for Compounding of
Offences
The minimum limit for compounding shall be
higher of the following
50% of tax involved OR
Rs.10,000
The upper limit for compounding shall be higher of
the following
150% of tax involved OR
Rs.30,000
Abatement of Proceedings
On payment of compounding amount, no further proceedings shall be initiated and any criminal
proceedings already initiated against such offence shall stand abated

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