Chapter XIX OFFENCES AND PENALTIES

122. Penalty for certain offences. - (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 utilizes 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 110 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 documents; (xxi) disposes off or tampers with an y 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. 1[(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 t ax credit availed of or passed on.]1 2[(1B) 3[Any electronic commerce operator, who is liable to collect tax at source under section 52, -]3 (i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted f rom registration by a notification issued under this Act to make such supply; (ii) allows an inter -State supply of goods or services or both through it by a person who is not eligible to make such inter -State supply; or (iii) fails to furnish the correct details in the statement to be furnished under sub - section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act, shall be liable to pay a penalty of te n thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.]2 (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 utilized, - (a) for any reason, other than the reason of fraud or any wilful misstatement or 111 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. (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 State 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.

special procedure

122-B. Penalty for failure to comply with track and trace mechanism

123. Penalty for failure to furnish information return. - If a person who is required to furnish an information return under section 150 fails to do so within the period specified in the notice issued under sub -section (3) thereof, the proper officer may direct, 112 that such person shall be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish such return continues: Provided that t he penalty imposed under this section shall not exceed five thousand rupees.

124. Fine for failure to furnish statistics. - If any person required to furnish any information or return under section 151,— (a) without reasonable cause fails to furnish such information or return as may be required under that section, or (b) wilfully furnishes or causes to furnish any information or return which he knows to be false, he shall be punishable with a fine which may extend to ten thousand rupees and in case of a continuing offence to a further fine which may extend to one hundred rupees for each day after the first day during which the offence continues subject to a maximum limit of twenty five thousand rupees.

125. General penalty. - Any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty five thousand rupees.

126. General disciplines related to penalty. - (1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence. Explana tion.––For the purpose of this sub-section, –– (a) a breach shall be considered a ‗minor breach‗ if the amount of tax involved is less than five thousand rupees; (b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record. (2) The penalty imposed under this Act shall depend on the facts and circumstances of each case and shall commensurate with the degree and severity of the breach. (3) No penalty shall be imposed on any person without givin g him an opportunity of being heard. (4) The officer under this Act shall while imposing penalty in an order for a breach of any law, regulation or procedural requirement, specify the nature of the breach and the applicable law, regulation or procedure under which the amount of penalty for the breach has been specified. (5) When a person voluntarily discloses to an officer under this Act the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the o fficer under this Act, the proper officer may consider this fact as a mitigating factor when quantifying a penalty for that person. (6) The provisions of this section shall not apply in such cases where the penalty specified under this Act is either a fixed su m or expressed as a fixed percentage.

127. Power to impose penalty in certain cases. - Where the proper officer is of the view that a person is liable to a penalty and the same is not covered under any proceedings under section 62 or section 63 or section 64 or section 73 or section 74 1[or section 74A ]1 or section 129 or section 130, he may issue an order levying such penalty after giving a reasonable opportunity of being heard to such person.

128. Power to waive penalty or fee or both. The Government may, by notification, waive in part or full, any penalty referred to in section 122 or section 123 or 113 section 125 or any late fee referred to in section 47 for such class of taxpayers and under such mitigating circumstances as may be specified therein on the recommendations of the Council.

certain tax periods

129. Detention, seizure and release of goods and conveyances in transit. - (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the 114 rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released, –– 2[(a) on payment of penalty equal to two hundred per cent. Of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal two per cent. Of the value of goods or twenty - five thousand rupees, whichever is less, where the owner of the goods comes forwards for payment of such penalty. (b) on payment of penalty equal to fifty per cent. Of the value of the goods or two hundred per cent. Of the tax payable on such goods, wh ichever is higher, and in case of exempted goods, on payment of on amount equal to five per cent. Of the value of goods or twenty - five thousand rupees, whichever is less, where the owner of the goods does not come forward for the payment of such penalty.]2 (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. 3[(2)XXX]3 2[(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).]2 (4) 2[No penalty]2 shall be determined under sub -section (3) without giving the person concerned an opportunity of being heard. (5) On payment of amount referred in sub -section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. 2[(6) where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub -section (1) within fifteen days from the date of receipt of the copy of the order passed under sub -section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3):] Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less: Provided further that where the detained or seized giids are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be resuced by the proper officer. ]2

130. Confiscation of goods or conveyances and levy of penalty. - (1) 1[where]1any person – (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or (ii) does not account for any goods on which he is liable to pay tax under this Act; or (iii) supplies any goods liable to tax under this Act without having applied for regist ration; or (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or 115 (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confis cation and the person shall be liable to penalty under section 122. (2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit: Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon: Provided further that the aggregate of such fine and penalty leviable shall not be less than the1[penalty equal to hundred per cent. of the tax payable of such goods]1: Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon. 2[(3)XXX]2 (4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. (5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government. (6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. (7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.

131. Confiscation or penalty not to interfere with other punishments. - Without prejudice to the provisions contained in the Code of Criminal Procedure, 1973 (Central Act 2 of 1974), no confiscation made or penalty imposed under the provisions of this Act or the rules made thereunder shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of this Act or under any other law for the time being in force.

132. Punishment for cer tain offences. - (1) 1[Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences]1, namely: — (a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax; (b) 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 leading to wrongful availment or utilisation of input tax credit or refund of tax; 1[(c) avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill;]1 116 (d) 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; (e) evades tax, 2[XXX]2or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d); (f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act; (g) 3[XXX]3 (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying , 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; (i) 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; (j) 3[XXX]3 (k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or (l) attempts to commit, or abets the commission of any of the offences mentioned in 4[clauses (a) to (f) and clauses (h), (i) and (k)]4 of this section, shall be punishable –– (i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; (ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine; (iii) in the case of 4[an offence specified in clause (b),]4 where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine; (iv) in cases where he commits or abets the commissio n of an offence specified in clause 117 (f) 3[XXX] 3, he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both. (2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine. (3) The imprisonment referred to in clauses (i), (ii) and (iii) of sub -section (1) and s ub- section (2) shall, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six months. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, (Central Act 2 of 1974), all offences under this Act, except the offences referred to in sub - section (5) shall be non-cognizable and bailable. (5) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) and punishable under cl ause (i) of that sub -section shall be cognizable and non-bailable. (6) A person shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner. Explanation. - For the purposes of this section, the term tax shall include the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or refund wrongly taken under the provisions of this Act, the Central Goods and Services Tax Act, the Integrated Goods and Services Tax Act, and cess levied und er the Goods and Services Tax (Compensation to States) Act. 4. Subtituted by Act 32 of 2023 w.e.f................

133. Liability of officers and certain other persons. - (1) Where any person engaged in connection with the collection of statistics under section 151 or compilation or computerisation thereof or if any officer of State tax having access to information specified under sub-section (1) of section 150, or if any person engaged in connection with the provision of service on the common portal or the agent of common portal, wilfully discloses any information or the contents of any return furnished under this Act or rules made thereunder otherwise than in execution of his duties under the said sections or for the purposes of prosecution for an offence under this Act or under any other Act for the time being in force, he shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to twenty five thousand rupees, or with both. (2) Any person – (a) who is a Government servant shall not be prosecuted for any offence under this section except with the previous sanction of the Government; (b) who is not a Government servant shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner.

134. Cognizance of offences. - No court shall take cognizance of any offence punishable under this Act or the rules made thereunder except with the previous sanction of the Commissioner, and no court inferior to that of a Magistrate of the First Class, shall try any such offence.

135. Presumption of culpable mental state. - In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the court 118 shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Explanation .—For the purposes of this section, – (i) the ex pression ―culpable mental state includes intention, motive, knowledge of a fact, and belief in, or reason to believe, a fact; (ii) a fact is said to be proved only when the cour t believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.

136. Relevancy of statements under certain circumstances. - A statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, –– (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the court and the court is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice.

137. Offences by Companies. - (1) Where an offence committed by a person under this Act is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the cond uct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. (2) Notwithstanding anything contained in sub -section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, m anager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. (3) Where an offence under this Act has been committed by a taxable person being a partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust, the partner or karta or managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section (2) shall mutatis mutandis apply to such persons. (4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, 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. Explanation .––For the purposes of this section, – (i) ―company‖ means a body corporate and includes a firm or other association of individuals; and 119 (ii) ―director‖, in relation to a firm, means a partner in the firm.

138. Compounding of offences. - (1) Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case may be, of such compounding amount in such manner as may be prescribed: Provided that nothing contained in this section shall apply to – 1[(a) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f), (h), (i) and (l) of sub -section (1) of section 132;]1 2[(b) XXX]2 1[(c) a person who has been accused of committing an offence under clause (b) of sub - section (1) of section 132;]1 (d) a person who has been convicted for an offence under this Act by a court; 2[(e) [XXX]2 (f) any other class of persons or offences as may be prescribed: 1. Subtituted by Act 32 of 2023 w.e.f………………. Provided further that any compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other law: Provided also that compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences. (2) The amount for compounding of offences under this section shall be such as may be prescribed, subject to the minimum amount not being less than 1[twenty -five per cent of the tax involved and the maximum amount not being more than one hundred percent of the tax involved]1, and the maximum amount not being less than thirty thousand rupees or one hundred and fifty per cent. of the tax, whichever is higher. (3) On payment of such compounding amount as may be determined by the Commissioner, no further proceedings shall be initiated under this Act against the accused person in respect of the same offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated. 1. Subtituted by Act 32 of 2023 w.e.f………………. CHAPTER XX TRANSITIONAL PROVISIONS