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Offences, Penalty and Prosecution under GST

Offences, Penalty and Prosecution Provisions under GST – 2019

Under GST, Provisions related to penalties and prosecutions are defined so that tax evasion can be avoided and true and fair tax revenue can be obtained by the Government. To avoid any penalty and prosecutions it is necessary to understand the Provisions of penalties and prosecutions. In this Post of Offences and Penalty provisions under GST we have try to highlight important provisions on Offences and Penalty provisions under GST.

Offences under GST Act:

In general sense Offence means “a breach of a law or rule; an illegal act”. The GST Law defines certain actions as Offence under GST and these offences are liable for penalty and some offences are liable for prosecution.

A List of Offences defined under GST Law is given below:

Offences related to

Nature of offence


  • Failure to register even after liable to get registered.

  • Furnishing of false information related to registration either at the time of applying for registration or subsequently


  • Making a supply without invoice or

  • Making a supply with with false/ incorrect invoice.

  • Issuing bogus invoice.

  • Issuing invoice or document by using GSTIN of another person.

Tax payment

  • Not paying tax collected for a period exceeding 180 days;

  • Non-deduction of TDS

  • Deducting TDS at Lower

  • Not depositing TDS;

  • Non-collection of TCS

  • Lower collection of TCS or

  • Non -payment of TCS

  • Suppressing turnover with intentio to tax evasion.

Input Tax Credit

  • Availing/utilizing fake ITC without making any purchase of Goods or Services;

  • Availing/distributing of input tax credit against the provisions of GST Law.


  • Fraudulently obtaining any refund.

Accounts and documents

  • Furnishing false information or furnishing of fake accounts/ documents with intent to evade tax.

  • Failure to maintain required accounts/documents

  • failure to retain accounts/documents for the period specified in GST Law.

  • Failure to furnish information/documents required by an officer during the course of an proceeding.

  • Transporting goods without prescribed documents.

Other matters

  • Creating Obstruction or preventing any official in discharge of his duty;

  • Supplying/transporting/storing any goods liable to confiscation.

  • Tampering/destroying any material evidence.

  • Disposing or tampering the goods detained/seized/attached under GST Law.

Cognizable and non-bailable offences:

Offences under GST are further classified into cognizable and non-bailable offences as well as non-cognizable and bailable offences. General meaning of these terms are as under:

  • Cognizable offences: A case in which specially empowered officer has the authority to arrest without warrant.

  • Non-cognizable offences: A case in which specially empowered officer has no authority to arrest without warrant.

  • Bailable offences: Offences for which bail can be granted.

  • Non-bailable Offences: Offences for which accused does not have right to be released on bail, but the bail can be granted at the discretion of court.

Following offences are cognizable and non-bailable offences under GST, if amount of tax evaded, amount of input tax credit availed or amount of refund taken is more than Rs.5 Crore:

(1) Supply of goods or services or both without issuance of bill;

(2) Issuance of bill or invoice without supply of goods or services.

(3) Avail wrong input tax credit on bills without supply;

(4) Tax collected but not deposited to the Government.

All other offences are non-cognizable and bailable.

Penalty provisions under GST:

Penalty provisions under GST:

Penalty means a punishment imposed for breaking a law, rule, or contract. GST Law provides that any person who has committed any offence shall be liable to a penalty which shall be higher of:

(1) Amount equivalent to tax evaded, obtained as refund, availed as input tax credit or not deducted or collected or short deducted or short collected; or

(2) Amount of Rs.10000/-.

Minimum amount of penalty  is Rs. 10,000/- for any Offence.

Reduction and waiver of penalty in some cases:

If any Notice for non payment or short payment of tax, erroneously refunded tax or wrong ITC availed for reasons other that willful default has been issued then no penalty shall be payable if the person has paid tax, interest and other fees within specified in show cause notice.

Similarly GST Law also provides for reduction of penalty in certain cases, details of which provisions are as under:

Date of payment of dues along with interest.

Amount of penalty applicable

In case of fraud, willful misstatement etc.

In other cases

Before issuance of notice

15% of tax


Within 30 days from issuance notice

25% of tax

Nil, except where self assessment tax or tax collected and not paid within 30 days from due date

Within 30 days of Order

50% of tax


After 30 days

Higher of Rs.10000/- or 100% of tax due.

Higher of Rs.10000/- or 10% of tax due.

General disciplines related to penalty:

GST Law specifies certain general disciplines to be followed while imposing penalty. Such disciples are as under:

(1) No penalty can be without issuance of Show Cause Notice.

(2) No penalty can be without providing proper opportunity of being heared.

(3) The penalty is dependent upon totality of facts and circumstances of the case.

(4) The penalty imposed should be according to degree and severity.

(5) The nature of the breach should be mentioned clearly in the order imposing the penalty.

(6) The provision under which the penalty has been imposed is to be specified.

Moreover, no penalty is to be imposed for any minor breach (where amount of tax involved is less than Rs.5000/-).

Provisions related to prosecution:

Provisions related to prosecution:

GST law also contains provisions related to prosecution for certain offences. These provisions are as under:

Amount of tax evaded or input tax credit wrongly availed or utilized or amount of refund wrongly taken

Imprisonment with fine

Exceeds Rs.5 Crore

5 years with fine

Exceeds Rs.2 Crore but does not Exceeds Rs.5 Crore

3 years with fine

Exceeds Rs.1 Crore but does not exceeds Rs.2 Crore

1 year with fine

Falsifies financial records or produces fake accounts or prevents any officer from discharging his duties or destroys any material evidence or document

6 months or with fine or both

Offence committed again

5 years with fine for second and every subsequent offence

Confiscation or detention of goods:

Confiscation or detention of goods:

If any person transports any goods or stores any such goods while in transit without invoice and a declaration, or supplies or stores any goods that he has not recorded in his books of account, then such goods shall be liable for detention or seizure along with any vehicle on which they are being transported.

When owner comes forward, such goods shall be released on payment of applicable tax and 100% penalty or on furnishing 100% security.

In case of exempted goods, penalty is 2% of value of goods or Rs.25000/- whichever is less.

When assessee does not come forward, levy of penalty shall be 50% of value of such goods and in case of exempted goods levy of penalty shall be 5% of value of such goods.

GST Law provides that goods are liable for confiscation, if any person:

  • Supplies or receives any goods against any provisions of the Law

  • Does not account for any goods in the manner required under the Law.

  • Supplies goods ,without applying for registration, that are liable to tax under the Law.

  • Uses any conveyance as a means of transport for carriage of goods in against the provisions of this Act.

  • Contravenes any provisions with the intention of evading payment of tax.

In case of confiscation of the goods, option has been given to the owner to pay fine in lieu of confiscation. Such fine shall not exceed market price of confiscated goods and it shall be in addition to tax and other charges payable in respect of such goods.

The confiscated goods shall be released on payment of applicable tax, penalty or fine.

Further, if the vehicle is found to be transporting goods without e-way bill, such vehicle along with goods can be detained or seized and would be released only on payment of appropriate tax and penalty. If the owner comes forward to pay the penalty and tax amount, he must pay 100% of tax payable and if he not comes forward, penalty will be 50% of value of goods.

Hope you will able to understand the provisions relating to penalty and prosecution under GST Law. Please share the article if you find it useful. If you have any query, message or suggestion, you can write the same in comment box below.

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