Explore Section 122 of the CGST Act, outlining key GST offenses, documentation errors, and applicable monetary penalties.
The Goods and Services Tax (GST) Act of 2017 outlines various categories of GST-related offenses and their corresponding penalties. The GST Council periodically updates these provisions and introduces new regulations concerning offenses and penalties to adapt to changing business environments. This article delves into Section 122 of the Central Goods and Services Tax (CGST) Act, which details specific offenses and their associated punishments.
What Section 122 of the CGST Act Defines
Section 122 of the CGST Act addresses offenses related to GST non-payment, the fraudulent claiming of excess input tax credit, and issues with incorrect documentation. This section prescribes various monetary penalties for these transgressions, including the payment of tax arrears with interest and penalties that differ based on the offense’s nature. The penalties outlined in this section are proportional to the gravity and type of the violation. The primary objective of Section 122 is to deter taxpayers from engaging in illicit activities concerning input tax credit claims, adherence to GST documentation standards, and the issuance of fraudulent invoices.
Detailed Provisions of CGST Act Section 122
| Sections | Offences under Section 122 of CGST Act | Penalty under Section 122 of CGST Act |
|---|---|---|
| Section 122(1) of CGST Act | – Providing goods or services without proper invoices or by issuing fraudulent invoices.- Issuing invoices for which no actual supply of goods or services occurs.- Collecting tax amounts but failing to deposit them with the government within three months.- Failure to deduct or remit tax as mandated by Section 51.- Failure to collect or remit tax as mandated by Section 52.- Claiming input tax credit without the actual receipt of goods or services.- Illegally obtaining tax refunds.- Improper utilization or distribution of input tax credit.- Submitting false financial records or documents to avoid tax obligations.- Failure to register under GST despite being legally required to do so.- Furnishing incorrect registration information.- Hindering tax authorities in their official duties.- Moving taxable goods without the necessary documentation.- Underreporting turnover to evade tax.- Neglecting to keep mandatory books and records.- Submitting false information or failing to provide required documents.- Supplying or storing goods that are subject to confiscation.- Generating invoices using another entity’s GST registration number.- Altering or destroying evidence or official documents.- Interfering with goods that have been detained, seized, or attached. | The higher of two values: either ₹10,000, or an amount equal to the tax evaded; or the tax not deducted, short-deducted, or not paid under CGST Section 51; or the tax not collected, short-collected, or not paid under Section 52; or the input tax credit irregularly claimed, passed on, or distributed; or the refund obtained fraudulently. |
| Section 122(1A) of CGST Act | – Benefiting from transactions defined under Section 122(1), clauses (i), (ii), (vii), or (ix). Specifically, this includes: (i) making supplies without issuing proper or accurate invoices; (ii) issuing invoices without an actual supply of goods or services; (vii) improperly claiming Input Tax Credit (ITC) without fully or partially receiving the goods or services; and (ix) availing or distributing ITC in violation of Section 20. | An amount equivalent to the tax evasion or the input tax credit improperly utilized. |
| Section 122(1B) of CGST Act | An e-commerce operator, as per Section 52 of the CGST Act, who via their platform: – Permits unregistered individuals (not exempted from registration) to conduct trade;- Allows inter-state supply of goods by ineligible persons; or- Fails to provide accurate documentation for these transactions. | The greater of ₹10,000 or the amount of tax liability that would have been applicable if the supplies had been made by registered persons. |
| Section 122(2) of CGST Act | A registered individual who supplies goods and services resulting in non-payment, short payment, erroneous refunds, or incorrect ITC claims, for reasons that are: – Not attributable to fraud or intentional misconduct; or- Directly related to fraud, deliberate misrepresentation, or concealment of facts. | The higher of ₹10,000 or 10% of the outstanding tax amount. |
| Section 122(3) of CGST Act | A registered individual who: – Assists or encourages offenses as described in Section 122(1), clauses (i) to (xxi);- Knowingly acquires, moves, stores, hides, or supplies goods or services subject to confiscation;- Knowingly receives or provides goods that violate any GST Act provisions;- Fails to appear before an officer when summoned to present evidence or documents concerning such illegal activities; or- Does not issue invoices in compliance with the GST Act. | Up to ₹25,000. |
