Section 137 attributes an offence by a company or other entity to the individuals in charge of its business, while letting them escape if they show they did not know or took all due care.
Key points
- Under section 137(1) of the CGST Act, 2017 where a company commits an offence, every person in charge of and responsible for its business at the time, and the company, are deemed guilty.
- A director, manager, secretary or other officer is also guilty where the offence was committed with his consent or connivance or is attributable to his negligence (section 137(2)).
- For a partnership firm, LLP, HUF or trust, the partner, karta or managing trustee is deemed guilty (section 137(3)).
- No one is punished who proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent it (section 137(4)).
The provisions
137(1)–(4)Offences by companies
Statutory text
(1) Where an offence committed by a person under this Act is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
(3) Where an offence under this Act has been committed by a taxable person being a partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust, the partner or karta or managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section (2) shall, mutatis mutandis , apply to such persons.
(4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
Explanation.-For the purposes of this section,-
(i) "company" means a body corporate and includes a firm or other association of individuals; and
(ii) "director" , in relation to a firm, means a partner in the firm.
* Enforced w.e.f . 1st July, 2017.
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
- Are directors liable for GST offences by a company?
- Persons in charge of the business are deemed guilty under section 137 of the CGST Act, unless they prove lack of knowledge or due diligence; other officers are liable on consent, connivance or neglect.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
The complaint must contain specific averments of the role of each person charged; vicarious liability is not presumed merely from holding office.