Section 132 of CGST Act - Punishment for Certain Offences

Section 132 of the Central Goods and Services Tax Act, 2017 prescribes criminal punishment for specified serious GST offences. The provision covers conduct such as tax evasion, fake invoicing, wrongful input tax credit, fraudulent refunds and specified dealings in goods or services that contravene the Act.

Updated legal position: The Finance Act, 2023 decriminalised the earlier offences in clauses (g), (j) and (k) of Section 132(1) and modified the punishment structure. These amendments were brought into force from 1 October 2023. In particular, the one-to-two-crore punishment slab now applies specifically to the fake-invoice offence in clause (b), rather than to every residual offence.

What is Section 132 of the CGST Act?

Section 132 is the principal penal provision in Chapter XIX of the CGST Act dealing with criminal prosecution for specified GST offences. A tax demand or civil penalty and a criminal prosecution are distinct consequences under the Act. Section 131 expressly provides that confiscation or penalty does not prevent another punishment for which a person is liable under the Act or another law.

The section must be read with related provisions including Section 131, Section 134, Section 135, Section 137 and Section 138.

Offences punishable under Section 132(1)

As presently applicable, Section 132(1) covers the following categories of conduct:

  1. Supply without invoice with intent to evade tax: supplying goods or services or both without issuing an invoice, in violation of the Act or Rules, with the intention to evade tax.
  2. Invoice without supply: issuing an invoice or bill without an underlying supply in violation of the Act or Rules, leading to wrongful availment or utilisation of input tax credit or refund of tax.
  3. Wrongful ITC on fake invoice: availing input tax credit using an invoice or bill referred to in clause (b), or fraudulently availing input tax credit without an invoice or bill.
  4. Tax collected but not paid: collecting an amount as tax but failing to pay it to the Government beyond three months from the date on which payment becomes due.
  5. Other fraudulent evasion, ITC or refund: evading tax, fraudulently availing input tax credit or fraudulently obtaining refund where the offence is not covered by clauses (a) to (d).
  6. False records or documents: falsifying or substituting financial records, producing fake accounts or documents, or furnishing false information with intent to evade tax due under the Act.
  7. Goods liable to confiscation: knowingly, or having reason to believe, acquiring, transporting, removing, depositing, keeping, concealing, supplying, purchasing or otherwise dealing with goods liable to confiscation.
  8. Contravening supply of services: knowingly, or having reason to believe, receiving or otherwise dealing with a supply of services in contravention of the Act or Rules.
  9. Attempt or abetment: attempting to commit or abetting offences specified in clauses (a) to (f), (h) and (i).
Important: The former clause (g) (obstructing an officer), clause (j) (tampering with or destroying material evidence or documents) and clause (k) (failure to supply required information or supplying false information) were omitted from Section 132(1) with effect from 1 October 2023.

Punishment and monetary thresholds under Section 132

Amount / offence Maximum imprisonment Fine
Tax evaded, ITC wrongly availed or utilised, or refund wrongly taken exceeding Rs. 5 crore Up to 5 years Yes
Amount exceeding Rs. 2 crore but not exceeding Rs. 5 crore Up to 3 years Yes
Offence under Section 132(1)(b) involving amount exceeding Rs. 1 crore but not exceeding Rs. 2 crore Up to 1 year Yes
Commission or abetment of the offence specified in clause (f) Up to 6 months Fine, or both
Practical threshold point: After the 2023 amendment, the general prosecution threshold is effectively above Rs. 2 crore for monetary offences, while the lower threshold above Rs. 1 crore continues for the offence of issuing invoices or bills without supply under Section 132(1)(b).

Repeat offences and minimum imprisonment

Section 132(2) - Subsequent conviction

If a person already convicted under Section 132 is again convicted under the section, the second and every subsequent offence is punishable with imprisonment that may extend to five years and with fine.

Section 132(3) - Minimum term

For imprisonment falling under clauses (i), (ii) and (iii) of Section 132(1), and under Section 132(2), the term shall ordinarily be not less than six months. A court may impose a shorter term only for special and adequate reasons recorded in its judgment.

Cognizable, non-cognizable and bail provisions

Section 132(4): Except for offences covered by Section 132(5), offences under the CGST Act are non-cognizable and bailable.

Section 132(5): Offences under clauses (a), (b), (c) or (d) of Section 132(1), when punishable under clause (i) because the amount exceeds Rs. 5 crore, are cognizable and non-bailable.

The power of arrest in appropriate cases is separately governed by Section 69 of the CGST Act. The procedural law now in force is the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which replaced the Code of Criminal Procedure, 1973 from 1 July 2024, subject to applicable saving and transitional provisions.

Section 132(6) - Previous sanction for prosecution

A person cannot be prosecuted for an offence under Section 132 without the previous sanction of the Commissioner. The sanction requirement is therefore a statutory precondition to prosecution under this section.

Meaning of "tax" for Section 132

The Explanation to Section 132 gives an expanded meaning to the term "tax". For this section, it includes tax evaded, input tax credit wrongly availed or utilised, or refund wrongly taken under the CGST Act, the State GST Acts, the Integrated GST Act, the Union Territory GST Act and cess levied under the Goods and Services Tax (Compensation to States) Act.

Finance Act, 2023: decriminalisation of specified GST offences

Section 156 of the Finance Act, 2023 amended Section 132(1). The amendment omitted clauses (g), (j) and (k), narrowed clause (l) so that attempt or abetment relates to clauses (a) to (f), (h) and (i), restricted the one-to-two-crore punishment slab in clause (iii) to the fake-invoice offence under clause (b), and removed references to the omitted clauses from clause (iv). The changes took effect from 1 October 2023.

These changes are important when reading older versions of Section 132 because an unamended reproduction may incorrectly show the omitted offences as still criminally punishable under this section.

For a complete understanding of GST prosecution, also see Section 122 - Penalty for certain offences, Section 131 - Confiscation or penalty not to interfere with other punishments, Section 134 - Cognizance of offences, Section 135 - Presumption of culpable mental state, Section 137 - Offences by companies and Section 138 - Compounding of offences.

Editorial note: This page is an explanatory article intended to present the current statutory framework in a readable form. For a proceeding involving arrest, prosecution, sanction, compounding or a historical tax period, the statutory text and amendments applicable to the relevant period should be checked.