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" What Are The Offences And Penalties In GST ? "


What is an Offence under GST?

Under GST, an offence is a breach of the provisions of GST Rules and GST Act. GST Act list 21 offences in section 122, chapter XVI. The following are the Offence under GST  :

1.      Supplying goods/ services without invoice or with incorrect/ false invoice.

2.      Issuing an invoice without the supply of goods/ services.

3.      Failing to pay collected TCS to the Government for a period exceeding 3 months.

4.      Collecting TCS in contravention of the law, but failing to submit to the Government for a period exceeding 3 months.

5.      Non deduction/ lower deduction of TDS or not depositing the TDS to the Government under section 51.

6.       Non collection/ lower collection of TCS or non­-payment of TCS to the Government under section 52.

7.      Claiming Input Tax Credit without the actual receipt of Goods and Services.

8.      Obtaining/ claiming a refund of CGST or SGST by fraud.

9.      Taking/ distributing Input Tax Credit in violation of the rules.

10.  Furnishing false information while registering under GST.

11.  Furnishing fake accounts/ documents or filing fake returns to evade tax.

12.  Not registering under GST despite being liable to pay tax.

13.  Providing false information at the time of applying for registration and other proceedings.

14.  Preventing any officer from discharging his duties.

15.  Transporting goods without proper documents.

16.  Suppressing sales to evade tax.

17.  Failing to maintain all the accounts/ books required by the law.

18.  Supplying/ transporting goods liable to confiscation.

19.  Issuing invoice using GSTIN of another taxable person.

20.  Destroying/ tampering any material evidence

21.  Tampering/ disposing goods that have been seized/ detained/ attached.

 When any of the above offence is committed by a company, the officer- in- charge, as well as the company will be held liable for such an offence. In case, offence is committed by an HUF, LLP or a Trust, then the Karta, partners and the managing trustee will be held responsible for such offence.   

 What is penalty?

The word “penalty” is not defined in GST Act and but various judicial pronouncements and principles of jurisprudence have laid down the meaning of penalty as:

A temporary punishment imposed by law/ contract for committing an offence or failing to do something that was the duty of a party to do.

Corporal (jail) and pecuniary (monetary) penalties are applicable for Offence under GST.

 Penalties for Common Offence Under GST :

 1.     Penalty for Delay in filing GSTR

As per GST Act, late fee is ₹100 per day per Act. So it is ₹100 under CGST & ₹100 under SGST. Total will be ₹200 per day. Maximum is ₹5,000. There is no late fee on IGST.

Along with late fee, interest at 18% per annum has to be paid.

2.     Penalty for not filing GSTR

It is mandatory for all the registered dealers to file GST returns before the due date. A taxpayer cannot file a return if previous monthly/quarterly return-not filed by him. If a taxpayer does not file GST returns, then he is liable to pay 10% of tax due or ₹10,000 -whichever is higher.

 3.     Penalty in cases of fraud

In case of fraud, an offender has to pay penalty amount of 100% of tax due or ₹10,000 -whichever is higher. For all the above 21 Offence under GST, penalty will be 100% (Minimum ₹10,000).

 4.     Penalty for helping someone to commit fraud

If any person:

·         Helps any person to commit fraud under GST

·         Fails to issue an invoice according to GST rules

·         Acquires any goods or services with full knowledge that it is in violation of GST rules

·         Fails to appear before the tax authority on receiving a summon

·         Fails to account any invoice appearing in the books, he is liable to pay a penalty extending up to ₹25,000

 5.     Penalty for other cases (no intention of fraud or tax evasion)

An offender not paying tax or making short-payments has to pay a penalty of 10% of the tax amount due or ₹10, 000, whichever is higher.

 6.     Residual Penalty

Any person who contravenes any of the provisions of this Act, for which no penalty separately mentioned, shall be liable to a penalty extending upto ₹25,000.

 Offences for which only Interest may apply : 

Charging incorrect type of GST (IGST instead of CGST/SGST) Pay the correct GST and get refund of the wrong type of GST paid earlier.
Incorrect filing of GSTR Interest @18% on shortfall amount
Delay in payment of invoice


ITC will be reversed if not paid within 6 months.
Wrongfully charging GST rate— charging lower rate Interest @18% on the shortfall amount

 Jail Term for Offence under GST :

Corporal (Jail) Penalties are also applicable under GST –



₹25 lakhs – ₹50 lakhs


1 year imprisonment + Fine
₹50 lakhs – ₹250 lakhs


3 year imprisonment + Fine
Above ₹250 lakhs 5 year imprisonment + Fine


 Minor Breaches under GST :

Often a business, especially SMEs can make some genuine mistakes, especially in the first few months of GST implementation, which may appear as an attempt to evade tax. These mistakes, committed without any malicious intention. Therefore, following guidelines – laid down under the GST law to save such businesses from the hassles of penalties –

·         Minor or no penalty – If error in taxes is ₹5, 000 or less and if the mistake omitted by the person is easily rectifiable.

·         A warning – issued by tax authorities in such cases.

 General Disciplines related to Penalty :

1.     Penalty imposed shall depend on the facts and circumstances of the case.

2.      Penalty shall be commensurate with the severity of the breach.

3.     No penalty shall be imposed without giving notice to show cause and reasonable opportunity to be heard.

4.     The tax authority shall give an explanation to the person regarding the reason for penalty and the nature of offence.

5.     On voluntarily disclosure of breach of law by a person, the tax authority may use this fact to lower the penalty for that person.

 Inspection, Search & Seizure under GST :

If the Joint Commissioner of SGST/CGST may have reasons to believe that in order to evade tax; a person has committed a fraud, then the Joint Commissioner can authorize any other officer of CGST/SGST, in writing, to conduct an inspection at places of business of the suspected person.

On the basis of the results of inspection, the Joint Commissioner of can order for a search if he believes that –

•         There are goods which might be confiscated

•         Any important documents/ books are hidden somewhere

 Arrest under GST :

If the Joint Commissioner of CGST/SGST believes that a person has committed a certain offence, then he can authorize any CGST/SGST officer to arrest that person.

The arrested person shall be informed of the grounds for his arrest. He shall appear before the magistrate within 24 hours in case of a cognizable offense (The offences where the police can arrest a person without an arrest warrant like murder, robbery, counterfeiting).

 Appeals :

If a taxpayer is not happy with any order passed against him under GST, then he can appeal against such decision.

The first appeal against an order by an adjudicating officer goes to the First Appellate Authority

If the person is not happy with the decision of the First Appellate Authority, they can appeal to the National Appellate Tribunal, then to the High Court, and finally to the Supreme Court.

All appeals shall only be entertained if –

1.     Filed as per prescribed forms

2.     Minimum fees paid

 The maximum time limit for filing an appeal with the First appellate Authority is 3 months from the date of order.

 There are certain cases against which appeals cannot be filed –

1.      A prosecution order

2.      When the matter – transferred from one officer to another

3.      Seizure or retention of books of accounts

4.      Order to pay taxes or other amounts