CGST Act 2017 Section 122
Detailed guide on Central Goods and Services Tax Act, 2017 Section 122 covering offences and penalties under CGST Act.
The Central Goods and Services Tax Act, 2017 is a comprehensive law governing the levy and collection of GST in India. Section 122 of this Act deals specifically with offences and penalties related to GST violations. Understanding this section is crucial for taxpayers, businesses, and GST officers to ensure compliance and avoid legal consequences.
The CGST Act provides a framework for penalizing various offences such as tax evasion, issuance of false invoices, and failure to comply with GST provisions. Section 122 outlines the nature of offences, the penalties involved, and the procedures for enforcement. This knowledge helps professionals and businesses maintain proper records and adhere to GST norms effectively.
Central Goods and Services Tax Act, 2017 Section 122 – Exact Provision
Section 122 of the CGST Act specifies offences that attract penalties to curb fraudulent activities and tax evasion. It lists various wrongful acts like issuing fake invoices, collecting tax without payment, and misusing input tax credit. The section empowers authorities to impose penalties to protect government revenue and ensure compliance.
Defines specific GST offences attracting penalties.
Includes issuing fake or false invoices.
Penalizes non-payment of collected tax.
Targets misuse of input tax credit.
Supports enforcement of GST compliance.
Explanation of CGST Act Section 122
This section outlines offences related to GST compliance and the penalties for such acts.
It applies to registered persons, suppliers, recipients, and other GST stakeholders.
Targets wrongful acts like issuing invoices without supply or collecting tax without payment.
Conditions include fraudulent intent or negligence in GST compliance.
Triggers include issuance of false documents, non-payment of tax, and misuse of input tax credit.
Allows authorities to impose penalties and take legal action.
Restricts fraudulent claims and protects government revenue.
Purpose and Rationale of CGST Act Section 122
Section 122 aims to prevent tax evasion and fraudulent practices under GST. It ensures that all taxpayers comply with the law and pay the correct amount of tax. The provision promotes transparency and accountability in GST transactions.
Ensures uniform enforcement of GST laws.
Prevents tax evasion and leakage of revenue.
Streamlines compliance and deters fraud.
Protects the integrity of input tax credit mechanism.
Supports government revenue collection efforts.
When CGST Act Section 122 Applies
This section applies when offences related to GST compliance occur, such as issuing fake invoices or non-payment of collected tax.
Applies to all taxable supplies of goods and services.
Relevant at the time of supply, invoicing, or tax payment.
Focuses on intra-state and inter-state supplies.
Impacts registered taxpayers and casual taxable persons.
Excludes minor procedural errors without fraudulent intent.
Tax Treatment and Legal Effect under CGST Act Section 122
Section 122 does not directly affect tax computation but imposes penalties for offences related to tax evasion or fraudulent practices. It complements charging and valuation provisions by penalizing non-compliance.
The section empowers authorities to recover unpaid tax along with interest and penalties. It also restricts wrongful input tax credit claims and deters issuance of fake invoices.
Penalties imposed do not reduce tax liability.
Supports recovery of evaded tax and interest.
Ensures proper tax compliance and documentation.
Nature of Obligation or Benefit under CGST Act Section 122
This section creates compliance obligations and penalties for non-compliance. It is mandatory for all GST registrants to avoid offences listed under this section.
Non-compliance leads to penalties, while adherence ensures lawful benefit of input tax credit and tax credits.
Creates mandatory compliance obligations.
Penalties are punitive, not beneficial.
Applies to all registered taxpayers and related persons.
Encourages lawful tax practices and documentation.
Stage of GST Process Where Section Applies
Section 122 applies primarily at the stages of invoicing, tax payment, and return filing. It also becomes relevant during assessment and audit when offences are detected.
During issuance of invoices and bills.
At the time of payment of tax collected.
During filing of GST returns.
In assessment, audit, or scrutiny proceedings.
During recovery or prosecution stages.
Penalties, Interest, or Consequences under CGST Act Section 122
Penalties under Section 122 can be substantial, depending on the offence. Interest on unpaid tax is also applicable. In serious cases, prosecution may be initiated.
Non-compliance can lead to financial loss, legal proceedings, and reputational damage.
Penalty up to 100% of tax evaded or amount involved.
Interest on delayed or non-payment of tax.
Possible prosecution for serious offences.
Confiscation of goods or conveyance in some cases.
Adverse impact on business credibility.
Example of CGST Act Section 122 in Practical Use
Supplier X issues invoices for goods never supplied to claim input tax credit fraudulently. GST authorities detect the mismatch during audit. Under Section 122, Supplier X is liable to pay penalty equal to the tax amount evaded and interest. The supplier also faces prosecution for issuing fake invoices.
This example highlights the importance of accurate invoicing and compliance to avoid penalties.
Fraudulent invoice issuance leads to heavy penalties.
Authorities actively monitor and penalize GST offences.
Historical Background of CGST Act Section 122
Section 122 was introduced in the CGST Act, 2017 to address the need for stringent measures against GST offences. It replaced multiple penalty provisions under earlier indirect tax laws.
Introduced with GST rollout in 2017.
Designed to unify penalty provisions under one section.
Amended periodically by GST Council to cover emerging offences.
Modern Relevance of CGST Act Section 122
In 2026, Section 122 remains vital for enforcing GST compliance. Digital tools like GSTN, e-invoicing, and e-way bills help detect offences early, making penalties under this section more enforceable.
Supports digital compliance and fraud detection.
Remains relevant for policy enforcement.
Ensures practical deterrence against tax evasion.
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 122
No landmark case directly interprets this section as of 2026.
Key Facts Summary for CGST Act Section 122
Section: 122
Title: Offences and Penalties
Category: Penalty, Offences
Applies To: Registered persons, suppliers, recipients, GST stakeholders
Tax Impact: Penalties and interest on evaded tax
Compliance Requirement: Strict adherence to GST provisions to avoid offences
Related Forms/Returns: GST returns, audit reports
Conclusion on CGST Act Section 122
Section 122 of the CGST Act, 2017 plays a critical role in maintaining the integrity of the GST system. It defines offences and prescribes penalties to deter fraudulent activities and ensure timely tax payment. This section protects government revenue and promotes fair business practices.
Taxpayers and professionals must understand and comply with this provision to avoid severe penalties and legal consequences. With increasing digitalization, enforcement of Section 122 has become more effective, making compliance essential for all GST registrants.
FAQs on CGST Act Section 122
What types of offences are covered under Section 122?
Section 122 covers offences like issuing fake invoices, collecting tax without payment, misuse of input tax credit, and tampering with GST documents.
Who can be penalized under this section?
Registered taxpayers, suppliers, recipients, and other GST stakeholders who commit offences under the CGST Act can be penalized under Section 122.
What is the maximum penalty under Section 122?
The penalty can be up to 100% of the tax amount involved in the offence, along with interest and possible prosecution.
Does Section 122 affect input tax credit claims?
Yes, misuse or fraudulent claims of input tax credit are penalized under Section 122 to prevent tax evasion.
Can prosecution be initiated under Section 122?
Yes, serious offences under Section 122 may lead to prosecution besides penalties and interest.