Section 127 of CGST Act - Power to Impose Penalty in Certain Cases
Updated: 15 September 2026
Section 127 of the Central Goods and Services Tax Act, 2017 gives the proper officer a residual power to impose a penalty where a person is considered liable to penalty but that penalty is not covered by the specified assessment, demand, detention or confiscation proceedings. A reasonable opportunity of being heard must be given before the penalty order is passed.
Updated text of Section 127
Where the proper officer is of the view that a person is liable to a penalty and the same is not covered under any proceedings under section 62 or section 63 or section 64 or section 73 or section 74 or section 74A or section 129 or section 130, he may issue an order levying such penalty after giving a reasonable opportunity of being heard to such person.
The reference to Section 74A was inserted in Section 127 by section 145 of the Finance (No. 2) Act, 2024. The current official CBIC text therefore includes Section 74A in the list of proceedings excluded from the residual penalty power under Section 127.
Meaning and scope of Section 127
Section 127 is not a general authority to duplicate a penalty already being dealt with in another specified statutory proceeding. It applies when the proper officer forms the view that a person is liable to a penalty and the matter is not covered by proceedings under Sections 62, 63, 64, 73, 74, 74A, 129 or 130.
The provision also expressly incorporates the principle of natural justice. Before an order levying penalty is made, the affected person must receive a reasonable opportunity of being heard. Section 127 should also be read with Section 126, which lays down general disciplines relating to penalties, including proportionality and the requirement to specify the nature of the breach and the applicable law when imposing a penalty.
Key requirements before a penalty under Section 127
- Formation of a view: The proper officer must be of the view that the person is liable to a penalty under the CGST Act.
- No overlap with specified proceedings: The penalty must not be covered by proceedings under Sections 62, 63, 64, 73, 74, 74A, 129 or 130.
- Opportunity of hearing: A reasonable opportunity of being heard must be provided before the penalty order is issued.
- Reasoned statutory basis: Section 126 should be considered where applicable, particularly the requirement to identify the breach and the legal provision under which the penalty is specified.
Related CGST Act provisions
Section 122 - Penalty for certain offences specifies penalties for listed GST contraventions. Section 125 - General penalty applies where a contravention has no separately provided penalty. Section 126 - General disciplines related to penalty contains principles governing imposition and quantification of penalties. Section 127 supplies the procedural power to levy penalty in qualifying cases outside the proceedings expressly listed in the section.
Official legal sources
For the authoritative legislation and amendment history, refer to the Central Goods and Services Tax Act, 2017 on India Code and the CBIC Tax Information Portal - Section 127.
This page is an informational guide to the statutory provision. For a particular notice, penalty order or dispute, the applicable tax period, charging provision, facts and current notifications should be checked separately.