Section 122 of GST Act: Penalty for certain offences

Amended and updated notes on section 122 of CGST Act, 2017. Detail discussion on provisions and rules related to penalty for certain offences.

Chapter XIX (Sections 122–138) of the Central Goods and Services Tax Act, 2017 deals with the provisions related to offences and penalties. Section 122 of CGST 2017 provides for penalty for certain offences.

Recently, we have discussed in detail section 121 (Non-appealable decisions and orders) of CGST Act 2017. Today, we learn the provisions of section 122 of Central GST Act 2017.

Section 122 of the Central Goods and Services Tax Act, 2017 has been notified by the Ministry of Finance vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017. This notification was come into force from 1st July, 2017 i.e. the commencement date of section 122 is 1-7-2017.

Name of Act	The Central Goods and Services Tax Act 2017
Enacted by	Parliament of India
Administered by	Central Board of Indirect Taxes & Customs
Governing body	GST Council
Number of Chapters	21
Number of Sections	174
You are reading:
Chapter No.	XIX
Chapter Name	Offences and Penalties
Section No.	122
Section Name	Penalty for certain offences
Updated 2024 Edition	GST Law Book PDF

Relevant Rules and Forms for GST Section 122:

• Rule 142: Notice and order for demand of amounts payable under the Act
  • FORM GST DRC – 01: Summary of Show Cause Notice
  • FORM GST DRC – 01A: Intimation of tax ascertained as being payable under section 73(5)/74(5)
  • FORM GST DRC – 02: Summary of Statement
  • FORM GST DRC – 03: Intimation of payment made voluntarily or made against the show cause notice (SCN) or statement or intimation of tax ascertained through
  • FORM GST DRC-01A.
  • FORM GST DRC – 04: Acknowledgement of acceptance of payment made voluntarily
  • FORM GST DRC – 05: Intimation of conclusion of proceedings
  • FORM GST DRC – 06: Reply to the Show Cause Notice
  • FORM GST DRC – 07: Summary of the order
  • FORM GST DRC – 07A: Summary of the order creating demand under existing laws  
  • FORM GST DRC – 08: Summary of Rectification /Withdrawal Order

Section 122 of Central GST – Penalty for certain offences¹

Section 122 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017.

Section 122(1) of CGST Act

Section 122(1): Where a taxable person who––

• (i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
• (ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
• (iii) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
• (iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
• (v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax;
• (vi) fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;
• (vii) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
• (viii) fraudulently obtains refund of tax under this Act;
• (ix) takes or distributes input tax credit in contravention of section 20, or the rules made thereunder;
• (x) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
• (xi) is liable to be registered under this Act but fails to obtain registration;
• (xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
• (xiii) obstructs or prevents any officer in discharge of his duties under this Act;
• (xiv) transports any taxable goods without the cover of documents as may be specified in this behalf;
• (xv) suppresses his turnover leading to evasion of tax under this Act;
• (xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
• (xvii) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
• (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
• (xix) issues any invoice or document by using the registration number of another registered person;
• (xx) tampers with, or destroys any material evidence or document;
• (xxi) disposes off or tampers with any goods that have been detained, seized, or attached under this Act,
• he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.

Section 122(1A) of CGST Act

Section 122(1A): Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on. [Sub-section (1A) of section 122 was inserted by the Finance Act, 2020.]

Section 122(2) of CGST Act

Section 122(2): Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised, —

• (a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten per cent. of the tax due from such person, whichever is higher;
• (b) for reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten thousand rupees or the tax due from such person, whichever is higher.

Section 122(3) of CGST Act

Section 122(3): Any person who––

• (a) aids or abets any of the offences specified in clauses (i) to (xxi) of sub-section (1);
• (b) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder;
• (c) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;
• (d) 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;
• (e) fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to account for an invoice in his books of account, shall be liable to a penalty which may extend to twenty-five thousand rupees.

1. Section 122 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017. ↩︎