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The Central Goods and Services Tax Act was implemented in the year 2017 through the Central Goods and Services Tax Act, 2017. The main idea of passing this Act is to make a provision for levy and collection of taxes on intra-state supply of goods or services or both by the Central Government and the matters connected therewith or incidental thereto. The phrase used to publicize it was ‘One Nation, one tax.’ This act involves taxes levied by the Centre, State, and the Union Territory Governments. Implementation of GST was an exotic change in India which brought a single Central tax system complying with all the products. It replaces taxes such as service tax, sales tax, excise tax, etc. GST will ensure the minimum flow of taxes and so inflation is controlled. As inflation is controlled, the cost of doing business is also reduced. It reduces the multiplicity of taxes and compliance costs. A taxpayer need not pay his advances received for the supply of goods. After the introduction of GST, the check posts across the country were abolished for fast transportation. It also helps India to compete in the global market effectively. For accessibility, there is an online portal for GST introduced by the government in which people can register, pay, and file their taxes. There is multiple slab tax for different products. They are of four types, Central GST, State GST, Union Territory GST, and Integrated GST. When GST is paid, it is divided equally where one part goes to the Centre and the other part to the State. If the transaction is done within a Union Territory without involving the State, then the part that goes to the Union Territory is called as the Union territory GST. If the transaction involves State or Union Territory and a foreign territory then there will be no division of the tax levied. It is called the integrated GST. Alcohol, petroleum, entertainment tax, and tobacco do not come under the ambit of GST. However, what happens if a person does not comply with the rules of this Act? To know that let us see the offenses and penalties listed in the Act. OFFENCES & PENALTIES Every business owner, Chartered Accountants and Tax Professionals should be aware of these offences to prevent any wrongful act. According to Section 122(1), there are a total of 21 offences related to GST. They are:

  1. Goods and services supplied without the issuance of invoice or the issued invoice are incorrect or it is a false invoice.

  2. An invoice is issued through the goods and services were not supplied.

  3. The tax was collected but failed to remit it to the government within three months.

  4. Taxes are collected contravening the provisions of this Act but failed to pay the same within three months.

  5. Fails to deduct or deposit the tax to the government by contravening Section 51 of the Act.

  6. Failing to collect the tax or collecting less amount of tax or failing to pay the government the collected tax by contravening the provisions of the Act.

  7. Utilizing the input tax credit without receipt of goods and contravening the provisions of the Act.

  8. Obtaining the refund of tax fraudulently.

  9. The input tax credit is distributed by contravening Section 20 of the Act.

  10. Falsified or substituted financial records are submitted or fake account is produced or furnished documents or information is false.

  11. Fails to obtain registration.

  12. False information is furnished during or subsequent to the registration.

  13. Preventing or obstructing any officers while discharging their duty according to this Act.

  14. Transporting the taxable goods without any documents prescribed by the Act.

  15. Suppressing any turnover that leads to tax evasion.

  16. Not maintain or retaining the books or documents according to the Act.

  17. Fails to provide any document or information for an officer, which asked to comply with the provisions of the Act or furnishing false information or documents during any proceeding.

  18. Supplying, transporting, or storing any goods that are meant to be confiscated under this Act.

  19. Falsely issuing any invoice or document using the registration number of any other person.

  20. Tampering or destroying any documents or evidence.

  21. Disposing or tampering the goods that are seized, detained, or attached to this Act.

The persons who commit these offences are liable to pay rupees ten thousand or the amount equivalent to the fraudulent act done, whichever is higher. Section 122(2) says that if a person failed to pay tax or short-paid the tax or erroneously refunded or the input tax credit was wrongly utilized for a supplied goods and services then he is liable to pay rupees ten thousand or ten percent of the tax due, whichever is higher. But if the same act is done by means of fraud, misstatement or suppression of facts then the person is liable to pay rupees ten thousand or the tax amount due from him, whichever is higher. According to Section 122(3), if any person abets or aids the other person to do any act that doesn’t fit within the ambit of Section 122(1), acquires the possession of the goods or trades the goods knowing that is meant to be confiscated under the Act, supplies any goods that are out of the ambit of the Act, fails to submit the evidence or documents to the central tax officer or fails to issue invoice accordingly will be liable to pay the penalty that may extend to rupees twenty-five thousand rupees. If a person is required to submit documents or information according to Section 150 of the Act but fails to do so then the person according to Section 123 should pay a penalty of rupees one hundred for each day that person has failed to furnish that information. Any person who is liable to furnish information according to Section 51, but fails to do so willfully or without any reasonable cause is liable to pay rupees ten thousand. If the same offense is committed again then he will be liable to pay rupees one hundred each day of non-submissions of information according to Section 124. According to Section 125 of the Act, if any person contravenes the provisions of the Act which doesn’t specifically mention penalty will be liable to pay the penalty, which may extend to rupees twenty-five thousand. BUSINESS According to Section 137 of the Act if a company the officers who were in charge during the commission of offense such as the secretary, director, manager, etc. including the whole company will be held liable. In the cases of Limited Liability Partnership Firm (LLP), Hindu Undivided Family (HUF), or trust does the same offenses, then the partner or Karta or the managing trustee will be held liable respectively. GENERAL PRINCIPLES Following are the general principles for imposing the penalty,

  1. No penalty for small errors that only costs up to rupees five thousand.

  2. No penalty if the documented errors are easily rectifiable.

  3. Before giving a penalty degree and severity of goods will be tested.

  4. Only after giving notice and access to a personal hearing penalty will be imposed.

  5. Voluntary disclosure of the offense done may be considered as a mitigating factor of penalty.

IMPRISONMENT According to Section 132 of the Act, the period of imprisonment depends on the amount of tax evaded.

  1. If the amount of tax evaded or wrongly utilized exceeds rupees five hundred lakhs then the maximum period of imprisonment would be five years. This offense is non-bailable.

  2. If the amount of tax evaded or wrongly utilized is between rupees two hundred lakhs and rupees five hundred lakhs then the person who committed the offense will be in imprisonment for a maximum period of three years.

  3. If the amount of tax evaded or wrongly utilized is from rupees one hundred lakhs to rupees two hundred lakhs, the period of imprisonment would be a maximum of one year.

  4. For all these offenses fines will also be imposed accordingly.


According to Section 47 of the Act, if a person fails to furnish the details of inward supply required under Section 37, outward supply required under Section 38, the monthly return required under Section 39 or final return required under Section 45 within the due time then he will be liable to pay rupees hundred each day of non-submission of details which may extend to a maximum amount of rupees five thousand rupees.

  1. If a person fails to furnish the return according to Section 44 within the due date then he will be liable to pay rupees hundreds of every day of not furnishing the returns that may extend to the maximum of quarter percent of the turnover of the State or the Union Territory.

  2. According to Section 51 of the Act if the deductor fails to furnish the TDS certificate to the deductee within five days of the credit to the government then the deductor should pay rupees one hundred for each day of not issuing the certificate to a maximum of rupees five thousand.

CONCLUSION Most of the organizations suggested the government to reduce the penalties. That is because they believed that majority of the offenses have been committed erroneously but not intentionally. But it is better to be cautious than to be sorry and so the government decided to stick with these provisions. These provisions will remind every taxpayer to be cautious and help to reduce offenses.


III year,, L.L.B., (Hons.)