Section 125 of CGST Act - General Penalty
Section 125 of the Central Goods and Services Tax Act, 2017 is a residual penalty provision. It applies where a person contravenes the CGST Act or the rules made under it and the Act does not separately provide a penalty for that contravention.
Text and meaning of Section 125
General penalty: Any person who contravenes a provision of the CGST Act or the rules made under it, where no penalty is separately provided in the Act, is liable to a penalty that may extend to Rs. 25,000.
When does Section 125 apply?
Section 125 is intended to cover a contravention only when the CGST Act does not prescribe a separate penalty for that particular default. Before invoking it, the nature of the alleged breach and the existence of any specific penalty provision should therefore be identified.
| Requirement | Practical effect |
|---|---|
| Contravention of the CGST Act or rules | There must be an identifiable statutory or rule-based requirement that has been breached. |
| No separate penalty provided | Section 125 operates as a general or residual penalty provision. |
| Maximum amount | The penalty may extend to Rs. 25,000; the section does not state that Rs. 25,000 must be imposed in every case. |
Section 126 safeguards and proportionality
The general disciplines in Section 126 of the CGST Act are important when a penalty is discretionary. Section 126 addresses minor breaches, proportionality, opportunity of hearing, specification of the breach and applicable law in the penalty order, and voluntary disclosure as a possible mitigating factor, subject to the statutory conditions.
Procedure under Section 127
Section 127 empowers the proper officer, in cases falling within that provision, to levy a penalty after giving the person a reasonable opportunity of being heard. The precise procedure depends on the proceedings and statutory provision applicable to the alleged default.
Waiver under Section 128
Section 128 authorises the Government, on the recommendations of the GST Council and by notification, to waive in part or in full specified penalties, including a penalty referred to in Section 125, for specified classes of taxpayers and mitigating circumstances. Any claimed waiver should be checked against the notification actually applicable to the taxpayer and period concerned.
Related CGST penalty provisions
For defaults carrying their own consequences, the specific provision should be examined first. Relevant provisions in Chapter XIX include Section 122 - penalty for certain offences, Section 123 - failure to furnish information return, Section 124 - failure to furnish statistics, Section 129 - detention, seizure and release in transit, and Section 130 - confiscation and penalty.
Frequently asked questions
What is the maximum penalty under Section 125?
The maximum penalty stated in Section 125 is Rs. 25,000.
Can Section 125 be used when another section already provides a penalty?
Section 125 is framed for a contravention for which no penalty is separately provided in the CGST Act. A specific applicable penalty provision should therefore be considered before resorting to Section 125.
Is a hearing required?
Section 126 provides that no penalty shall be imposed without giving the person an opportunity of being heard. Section 127 also expressly requires a reasonable opportunity of being heard for orders falling within that provision.
For the current statutory material, amendments, notifications and GST rules, consult the official CBIC GST Acts and CBIC GST Rules pages.