Sections 122 explained: this guide covers what it 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.
Key Facts About Sections 122
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What is the penalty for issuing fake invoices under GST?
Issuing invoices without actual supply of goods or services is the most serious GST offence. Consequences: (a) penalty equal to 100% of the tax involved under Section 122, (b) prosecution under Section 132 with imprisonment up to 5 years for amounts above Rs. 5 crore, up to 3 years for Rs. 2-5 crore, (c) arrest without warrant if amount exceeds Rs. 5 crore, (d) ITC reversal for ALL recipients who used the fake invoices, (e) GSTIN cancellation.
Can a GST officer arrest a person?
Yes — under Section 69, the Commissioner can authorize arrest of a person who has committed offences under Section 132 where the tax amount involved exceeds Rs. 5 crore. For cognizable and non-bailable offences (fake invoices): arrest possible even for amounts between Rs. 2-5 crore. The arrested person must be produced before a Magistrate within 24 hours. Bail provisions: for amounts above Rs. 5 crore (non-bailable offence), bail is at the discretion of the court with stringent conditions. For amounts below Rs. 5 crore: bailable offence, bail as a matter of right.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Sections 122: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.
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