Sections 122-138 CGST — explained: this guide covers what Sections 122-138 CGST — means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 122 — Penalty for Specified Offences
Penalty of Rs. 10,000 or the tax amount involved, whichever is HIGHER, for 21 specified offences including:
(a) Supply without invoice or with false invoice
(b) Issuing invoice without supply (fake invoice — the most serious GST offence)
(c) Collecting tax but not depositing with government within 3 months
(d) Availing ITC without actual receipt of goods/services
(e) Obtaining refund fraudulently
(f) Falsifying financial records or producing fake accounts/documents
(g) Obstructing officer in discharge of duties
(h) Transporting taxable goods without documents (e-way bill violations)
(i) Suppressing turnover leading to evasion
Section 132 — Prosecution (Criminal Proceedings)
Prosecution (criminal case in court) can be initiated for offences involving tax amount above specified threshold:
| Offence | Threshold | Punishment |
|---|---|---|
| Tax evasion (any of the 21 offences above) | Rs. 2 crore+ | Up to 5 years imprisonment + fine |
| Tax evasion (repeat offender) | Rs. 2 crore+ | Up to 5 years (no minimum) |
| Fake invoice (without supply) | Rs. 5 crore+ | Up to 5 years + fine |
| Fake invoice (without supply) | Rs. 2-5 crore | Up to 3 years + fine |
| Fake invoice (without supply) | Rs. 1-2 crore | Up to 1 year + fine |
| Obstructing officer | Any amount | Up to 6 months + fine |
Section 132 — Arrest Provisions
The Commissioner can authorize arrest of a person who has committed offences under Section 132 involving tax amount exceeding Rs. 5 crore. For amounts between Rs. 2-5 crore: arrest only for cognizable and non-bailable offences (fake invoices). Below Rs. 2 crore: no arrest, only prosecution through court.
Section 138 — Compounding of Offences
Offences (other than those involving fake invoices above Rs. 5 crore or repeat offenders) can be compounded by paying a compounding fee. Amount: minimum 50% of tax involved, maximum 150% of tax involved. Compounding closes criminal proceedings — no trial, no conviction.
Cannot be compounded: (a) offences involving tax above Rs. 5 crore with fake invoices, (b) repeat offenders who have already compounded once, (c) persons convicted under the Act.
E-Way Bill Violations — Section 129
Transporting goods without a valid e-way bill (or with expired e-way bill) leads to:
(a) Detention of goods and vehicle.
(b) Release on payment of applicable tax + penalty equal to 200% of tax (if owner comes forward) or 50% of value of goods + penalty (if owner does not come forward).
(c) If not released within 7 days: goods may be confiscated through proceedings under Section 130.
This is the most commonly encountered GST penalty in practice — thousands of vehicles are intercepted daily across India for e-way bill violations. Even genuine errors (expired e-way bill by a few hours, Part B not updated after vehicle change) result in detention and penalty.