Page 9 - Chap21 Offences & Penalties

02. Section 123:- Penalty for failure to furnish information return and
Section 124:- Fine for failure to furnish information

CCP 21.02.06.00
Whether the non-filing of information return u/s 150 or failure to furnish information as required

u/s 151 would attract penalty under the CGST Act? State the quantum of penalty prescribed under
the said Act?
Answer : Yes, it would attract penalty under the CGST Act as under:-

Ü As per section 123 of CGST Act, if a person who is required to furnish an information return u/s 150
fails to furnish the same within 90 days from the date of service of show cause notice,
Ø then such person shall be liable to pay a penalty of ₹ 100 for each day of the period during which
the failure to furnish such return continues.
Ø However, the maximum penalty shall be ₹ 5,000 only.

Ü Similarly, as per section 124, if any person who is required to furnish any information u/s 151,
Ø fails to furnish such information without reasonable cause or
Ø wilfully furnishes or causes to furnish any information which he knows to be false, then he shall be
punishable with a fine upto ₹ 10,000.

In case of a continuing offence, further fine shall be imposed upto ₹ 100 for each day
after the first day during which the offence continues subject to a maximum limit of ₹ 25,000.

03. Sec 126- General disciplines related to penalty
CCP 21.03.07.00
Mr. X, an unregistered person under GST, purchases the goods supplied by Mr. Y who is a

registered person without receiving a tax invoice from Mr. Y and thus helps in tax evasion by Mr.
Y. A disciplinary action is taken against Mr. X and an adhoc penalty of ₹ 20,000/- is imposed by
passing an order without describing contravention for which penalty is going to be imposed and

without mentioning the provisions under which penalty is going to be imposed. Should Mr. X
proceed to pay for penalty or challenge the order passed by Department?[Study Mat]
Answer :
Legal Provision:-
Ü The levy of penalty is subject to a certain disciplinary regime which is based on jurisprudence,

principles of natural justice and principles governing international trade and agreements. Such
general discipline is enshrined in section 126 of the CGST Act.
Ü Accordingly—
Ø penalty cannot be imposed without issue of a show cause notice and proper hearing in the

matter, affording an opportunity to the person proceeded against to rebut the allegations levelled
against him,
Ø penalty is to depend on the totality of the facts and circumstances of the case & also
commensurate with the degree and severity of breach of provisions of law or rules alleged,
Ø the nature of the breach is to be specified clearly in the order imposing the penalty,

Ø the provisions of the law under which the penalty has been imposed is to be specified.
Discussion & Conclusion:-
Ü In the given case, since SCN issued to Mr. X suffers from lack of clarity about nature of breach

which has taken place and about provision of law under which penalty has been imposed, SCN
issued by department may be challenged.
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