Section 122 of CGST Act - Penalty for Certain Offences
Updated: 15 September 2026
Section 122 of the Central Goods and Services Tax Act, 2017 is a principal civil penalty provision under GST. It identifies specified contraventions by taxable persons, beneficiaries of certain fraudulent transactions, specified electronic commerce operators, registered persons, and other persons.
Meaning and scope of Section 122
The expression "penalty for certain offences" in Section 122 covers monetary penalties for statutory contraventions. The provision should be read with the relevant charging, invoicing, input tax credit, registration, TDS, TCS, demand, confiscation and general penalty provisions of the CGST Act and the CGST Rules.
| Provision | Who is covered | Broad consequence |
|---|---|---|
| Section 122(1) | Taxable person committing any listed contravention | Rs. 10,000 or the specified tax/ITC/refund amount, whichever is higher |
| Section 122(1A) | Person retaining the benefit of specified transactions conducted at that person's instance | Penalty equal to tax evaded or ITC availed/passed on |
| Section 122(1B) | Electronic commerce operator liable to collect TCS under Section 52 | Rs. 10,000 or specified tax amount, whichever is higher |
| Section 122(2) | Registered person in tax short-payment, erroneous refund or wrongful ITC cases | Penalty varies depending on fraud, wilful misstatement or suppression |
| Section 122(3) | Any person committing listed ancillary defaults | Penalty may extend to Rs. 25,000 |
Section 122(1): specified contraventions by a taxable person
A taxable person may attract penalty under sub-section (1) where the person:
- supplies goods or services or both without an invoice, or issues an incorrect or false invoice for the supply;
- issues an invoice or bill without an underlying supply in violation of the Act or Rules;
- collects an amount as tax but fails to pay it to the Government beyond three months from the date payment becomes due;
- collects tax in contravention of the Act but fails to pay it to the Government beyond three months from the due date;
- fails to deduct, short-deducts, or fails to pay tax required under Section 51;
- fails to collect, short-collects, or fails to pay tax required under Section 52;
- takes or utilises input tax credit without actual receipt of goods or services or both, fully or partly, contrary to the Act or Rules;
- fraudulently obtains a refund of tax;
- takes or distributes input tax credit in contravention of Section 20 or the Rules;
- falsifies or substitutes financial records, produces fake accounts or documents, or furnishes false information or return with intent to evade tax;
- is liable to registration but fails to obtain registration;
- furnishes false information concerning registration particulars;
- obstructs or prevents an officer in discharge of duties under the Act;
- transports taxable goods without prescribed documents;
- suppresses turnover leading to tax evasion;
- fails to keep, maintain or retain required books of account or documents;
- fails to furnish information or documents called for by an officer, or furnishes false information or documents during proceedings;
- supplies, transports or stores goods which the person has reason to believe are liable to confiscation;
- issues an invoice or document using the registration number of another registered person;
- tampers with or destroys material evidence or documents; or
- disposes of or tampers with goods detained, seized or attached under the Act.
The penalty is Rs. 10,000 or an amount equivalent to the relevant tax evaded, TDS/TCS default, irregular ITC, or fraudulent refund, whichever is higher, as specified in the provision.
Section 122(1A): beneficiary of specified fraudulent transactions
Sub-section (1A) applies where a person retains the benefit of a transaction covered by clauses (i), (ii), (vii) or (ix) of Section 122(1), and the transaction is conducted at that person's instance. The penalty is an amount equivalent to the tax evaded or input tax credit availed of or passed on, as applicable.
Section 122(1B): penalty on specified e-commerce operators
Sub-section (1B) applies to an electronic commerce operator liable to collect tax at source under Section 52. It covers allowing specified supplies through the platform by an unregistered person who is not exempt from registration, allowing an inter-State supply by a person not eligible to make it, or failing to furnish correct details in the Section 52(4) statement for specified outward supplies by a person exempt from registration.
The penalty is Rs. 10,000 or an amount equivalent to the tax involved had the supply been made by a registered person other than a person paying tax under Section 10, whichever is higher. The restriction of sub-section (1B) to ECOs liable to collect TCS under Section 52 operates retrospectively from 1 October 2023.
Section 122(2): tax not paid, short-paid, erroneous refund or wrongful ITC
For a registered person, sub-section (2) distinguishes between non-fraud cases and cases involving fraud, wilful misstatement or suppression of facts to evade tax. In a non-fraud case, the penalty is Rs. 10,000 or 10 per cent of the tax due, whichever is higher. In a fraud, wilful misstatement or suppression case, the penalty is Rs. 10,000 or the tax due, whichever is higher.
Section 122(3): penalty up to Rs. 25,000
Any person may face a penalty up to Rs. 25,000 for specified conduct including aiding or abetting offences under Section 122(1), knowingly dealing with goods liable to confiscation, knowingly dealing with supplies of services contrary to the Act or Rules, failure to appear on summons, or failure to issue or account for an invoice as required.
Practical points before a penalty is imposed
Section 122 should not be read in isolation. The nature of the alleged contravention, the applicable demand provision, evidence, the statutory ingredients of the particular clause, and the general disciplines regarding penalty under Section 126 may be material. A notice and order should clearly identify the contravention and the legal basis of the penalty.
Related CGST Act provisions
See also Section 123 - Penalty for failure to furnish information return, Section 125 - General penalty, Section 126 - General disciplines related to penalty, Section 127 - Power to impose penalty in certain cases, Section 128 - Power to waive penalty or fee or both, Section 129 - Detention, seizure and release of goods and conveyances in transit, Section 130 - Confiscation, and Section 132 - Punishment for certain offences.
Source and amendment note
Section 122 forms part of Chapter XIX of the CGST Act. Sub-section (1A) was inserted by the Finance Act, 2020 and brought into force from 1 January 2021. Sub-section (1B) was inserted by the Finance Act, 2023 and brought into force from 1 October 2023. The Finance (No. 2) Act, 2024 restricted sub-section (1B), retrospectively from 1 October 2023, to electronic commerce operators liable to collect tax at source under Section 52.