CGST Act 2017 Section 120

The Central Goods and Services Tax Act, 2017 is a comprehensive legislation governing indirect taxation in India. It streamlines the levy and collection of GST across states and union territories. Understanding each section of this Act is crucial for taxpayers and professionals to ensure compliance and avoid penalties.

Section 120 of the CGST Act deals with penalties and consequences for non-compliance. This section is vital for taxpayers, businesses, and GST officers to understand the repercussions of violating GST provisions. It helps in maintaining discipline and adherence to the law.

Central Goods and Services Tax Act, 2017 Section 120 – Exact Provision

Section 120 outlines the penalties imposed for contraventions under the CGST Act. It empowers authorities to levy fines or initiate prosecution for offences. The section ensures that taxpayers adhere to GST rules, promoting voluntary compliance and deterring evasion.

• Specifies penalty for non-compliance with CGST provisions.

• Includes fines, interest, and prosecution.

• Applies to all registered persons and entities under GST.

• Supports enforcement of GST laws.

• Deters tax evasion and fraud.

Explanation of CGST Act Section 120

This section mandates penalties for violations of the CGST Act or related rules. It applies to all persons liable under GST, including registered taxpayers, casual taxable persons, and non-residents.

• States penalty provisions for non-compliance.

• Applies to registered persons, casual taxable persons, and non-residents.

• Triggers include failure to pay tax, incorrect returns, or evasion.

• Allows imposition of fines, interest, or prosecution.

• Ensures adherence to GST compliance requirements.

Purpose and Rationale of CGST Act Section 120

The section aims to enforce compliance and uphold the integrity of the GST system. It prevents tax evasion and ensures timely payment of dues.

• Ensures uniform indirect taxation enforcement.

• Prevents tax evasion and leakage.

• Streamlines compliance and deterrence.

• Promotes timely tax payments.

• Supports revenue collection and legal enforcement.

When CGST Act Section 120 Applies

Section 120 applies when a person fails to comply with any provision of the CGST Act or rules, such as delayed payment or incorrect filing.

• Applicable to all taxable supplies of goods and services.

• Triggered by non-compliance events like default or fraud.

• Relevant for intra-state and inter-state supplies.

• Impacts registered taxpayers and casual taxable persons.

• Excludes cases covered under specific exemption provisions.

Tax Treatment and Legal Effect under CGST Act Section 120

Penalties under Section 120 do not affect the underlying tax liability but add financial consequences for non-compliance. Interest may accrue on delayed payments, and prosecution can follow serious offences.

• Penalties are additional to tax dues.

• Interest applies on delayed payments.

• Prosecution possible for grave violations.

Nature of Obligation or Benefit under CGST Act Section 120

This section imposes mandatory compliance obligations and penalties. It does not provide benefits but enforces discipline among taxpayers.

• Creates mandatory compliance obligations.

• Imposes penalties and prosecution risks.

• Applies to all GST-registered entities.

• Non-compliance triggers financial and legal consequences.

Stage of GST Process Where Section Applies

Section 120 applies primarily during post-filing and payment stages, including assessment and audit. It also covers recovery and prosecution phases.

• Assessment and audit stages.

• Return filing and payment verification.

• Recovery of dues and penalties.

• Prosecution for offences.

Penalties, Interest, or Consequences under CGST Act Section 120

Section 120 empowers authorities to levy penalties, charge interest on delayed payments, and initiate prosecution for serious offences. Non-compliance can lead to fines and legal action.

• Interest on delayed tax payments.

• Monetary penalties for violations.

• Prosecution for fraudulent acts.

• Legal consequences including fines and imprisonment.

Example of CGST Act Section 120 in Practical Use

Supplier X failed to file GST returns for three consecutive months and delayed tax payments. GST authorities invoked Section 120 to impose penalties and interest. Supplier X paid the dues along with fines to avoid prosecution. This ensured compliance and prevented further legal action.

• Penalties enforce timely compliance.

• Interest recovers revenue loss.

Historical Background of CGST Act Section 120

Introduced in 2017 with the GST rollout, Section 120 was designed to enforce compliance. Amendments by the GST Council have refined penalty provisions to balance deterrence and taxpayer fairness.

• Part of GST introduction in 2017.

• Original intent to deter non-compliance.

• Amended for clarity and proportionality.

Modern Relevance of CGST Act Section 120

In 2026, Section 120 remains critical for digital GST compliance. With e-invoicing and automated returns, penalties help maintain discipline and revenue integrity.

• Supports digital compliance enforcement.

• Relevant for e-invoicing and GSTN monitoring.

• Ensures policy adherence and revenue protection.

Related Sections

• CGST Act, 2017 Section 7 – Scope of supply.

• CGST Act, 2017 Section 9 – Levy and collection of tax.

• CGST Act, 2017 Section 16 – Eligibility for input tax credit.

• CGST Act, 2017 Section 31 – Tax invoice.

• CGST Act, 2017 Section 39 – Furnishing of returns.

• CGST Act, 2017 Section 73 – Demand for non-fraud cases.

Case References under CGST Act Section 120

No landmark case directly interprets this section as of 2026.

Key Facts Summary for CGST Act Section 120

• Section: 120

• Title: Penalties and Consequences

• Category: Penalty, Compliance

• Applies To: All GST registered persons and entities

• Tax Impact: Additional financial penalties and interest

• Compliance Requirement: Mandatory adherence to GST provisions

• Related Forms/Returns: GST returns, penalty notices

Conclusion on CGST Act Section 120

Section 120 is a vital provision that enforces compliance under the CGST Act. It ensures that taxpayers meet their obligations timely and accurately. Penalties and prosecution act as deterrents against evasion and fraud.

Understanding this section helps businesses avoid costly consequences. It supports the overall GST framework by promoting discipline and protecting government revenue. Timely compliance reduces risks and fosters a healthy tax environment.

FAQs on CGST Act Section 120

What types of penalties does Section 120 cover?

Section 120 covers monetary fines, interest on delayed payments, and prosecution for serious offences under the CGST Act.

Who is liable under Section 120?

All registered taxpayers, casual taxable persons, and non-residents under GST are liable for penalties under Section 120 if they violate the Act.

Can penalties under Section 120 be waived?

Penalties may be waived or reduced in certain cases based on the GST officer's discretion and circumstances, but interest on tax dues is generally mandatory.

Does Section 120 affect the tax amount payable?

No, penalties under Section 120 are additional to the tax amount payable and do not reduce or alter the tax liability itself.

How can taxpayers avoid penalties under Section 120?

Timely filing of returns, accurate tax payments, and adherence to GST rules help taxpayers avoid penalties under Section 120.