Section 122 is the main penalty provision. It lists offences such as supply without invoice, invoices without supply, wrongful credit and refund, and fixes the penalty — usually the higher of Rs. 10,000 and the tax involved. Since 2021 it also reaches the person who benefits from and directs a fake-invoice transaction.
Key points
- Under section 122(1) of the CGST Act, 2017 a taxable person who commits any of twenty-one listed offences — including supply without invoice, invoice without supply, collecting tax and not paying it, wrongful availment of credit or refund, and false returns — is liable to a penalty of Rs. 10,000 or the tax evaded or credit or refund wrongly taken, whichever is higher.
- From 01.01.2021, any person who retains the benefit of a transaction under clauses (i), (ii), (vii) or (ix) and at whose instance it is conducted is liable to a penalty equal to the tax evaded or credit availed or passed on (section 122(1A)).
- From 01.10.2023, an e-commerce operator liable to collect tax at source that allows a supply through it by an unregistered person not exempted from registration, or an inter-State supply by a person not eligible to make one, or fails to report correctly supplies by persons exempted from registration, is liable to the higher of Rs. 10,000 and the tax involved (section 122(1B), as substituted retrospectively by the Finance (No. 2) Act, 2024).
- A registered person who short pays tax is liable to 10% of tax (minimum Rs. 10,000), or to the tax due where fraud or suppression is involved (section 122(2)).
- Abetting offences, dealing in goods liable to confiscation, failing to appear on summons, and failing to issue or account for invoices attract a penalty of up to Rs. 25,000 (section 122(3)).
The provisions
122(1)Penalty for specified offences
Statutory text
(1) Where a taxable person who-
(i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
(ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
(iii) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
(iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
(v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax;
(vi) fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;
(vii) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
(viii) fraudulently obtains refund of tax under this Act;
(ix) takes or distributes input tax credit in contravention of section 20, or the rules made thereunder;
(x) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
(xi) is liable to be registered under this Act but fails to obtain registration;
(xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
(xiii) obstructs or prevents any officer in discharge of his duties under this Act;
(xiv) transports any taxable goods without the cover of documents as may be specified in this behalf;
(xv) suppresses his turnover leading to evasion of tax under this Act;
(xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
(xvii) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
(xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
(xix) issues any invoice or document by using the registration number of another registered person;
(xx) tampers with, or destroys any material evidence or document;
(xxi) disposes off or tampers with any goods that have been detained, seized, or attached under this Act,
he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.
*Enforced w.e.f. 1st July, 2017. Inserted (vide Notification No 92/2020- C.T, dated 22-12-2020 by s.126 of The Finance Act, 2020 (No. 12 of 2020) - Brought into force w.e.f. 01st January, 2021.
122(1A)–(1B)Beneficiaries of fake transactions; e-commerce operators
Statutory text
(1A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.
1[(1B) 2[Any electronic commerce operator, who is liable to collect tax at source under section 52,]—
(i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;
(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or
(iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,
shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher]
1. Inserted (w.e.f. 1st October, 2023 vide Notification No. 28/2023 - CT dated 31st july, 2023.) by s. 155 of The Finance Act 2023 (No. 8 of 2023).
2. Substituted (w.e.f. 01.10.2023) by section 144 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.
What it means
Sub-section (1A) reaches the person behind a fake-invoice transaction who is not the taxable person — for instance, a promoter who arranges invoices without supply. It requires both retention of benefit and the transaction being conducted at that person's instance. Property of such a person may be provisionally attached under section 83.
CBIC note 2 gives only the date of the Finance (No. 2) Act, 2024 for the substitution of the opening words of sub-section (1B); the substitution takes effect retrospectively from 01.10.2023, so that the clause applies only to e-commerce operators liable to collect tax at source under section 52.
122(2)–(3)Short payment; abetment and other lapses
Statutory text
(2) Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised,-
(a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten per cent. of the tax due from such person, whichever is higher;
(b) for reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten thousand rupees or the tax due from such person, whichever is higher.
(3) Any person who-
(a) aids or abets any of the offences specified in clauses (i) to (xxi) of subsection (1);
(b) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder;
(c) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;
(d) fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry;
(e) fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to account for an invoice in his books of account, shall be liable to a penalty which may extend to twenty-five thousand rupees.
What it means
Penalty under sub-section (2) is the penalty imposed in demand proceedings; it is not imposed separately where section 73, 74 or 74A has been applied. Sub-section (3)(d) penalises failure to appear on a summons under section 70. Section 132 creates no corresponding offence; the Finance Act, 2023 omitted clauses (g), (j) and (k) of section 132(1), on obstructing an officer, tampering with evidence and failing to supply information.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- What is the penalty for issuing GST invoices without supply?
- Rs. 10,000 or the credit wrongly passed on, whichever is higher, on the taxable person (section 122(1)(ii) CGST); and an equal penalty on the person who benefits from and directs the transaction (section 122(1A)).
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
The twenty-one clauses overlap with the prosecution offences in section 132(1). Where penalty is imposed under section 73, 74 or 74A for the same act, no further penalty may be imposed under this section (section 75(13)).