CGST Act 2017 Section 122: Penalty for Certain Offences (2026)
What Section 122 of the CGST Act, 2017 does: it lists the GST offences that attract a monetary penalty, such as issuing fake invoices or wrongly claiming input tax credit, and fixes how much that penalty is. Last verified October 2026.
Explainer · GST · Penalties
Section 122 of the Central Goods and Services Tax Act, 2017 (CGST Act) is the main penalty provision under GST. It lists the offences that attract a money penalty, such as supplying goods without an invoice, issuing an invoice without a supply, collecting tax but not paying it to the government, and wrongly claiming input tax credit, and it fixes the amount of the penalty for each situation. A penalty under Section 122 is a civil, monetary consequence imposed by the tax officer. It is different from prosecution, which is a criminal matter dealt with under Section 132. This explainer sets out the offences, the amounts under each sub-section, and how penalty differs from prosecution. Last verified October 2026.
- What it is: Section 122 of the CGST Act, 2017 lists the GST offences that attract a money penalty and fixes the amount.
- Section 122(1): twenty-one offences, such as fake invoicing and wrongful input tax credit, with a penalty of the higher of Rs 10,000 or the tax involved.
- Section 122(2): short payment with no fraud draws 10% of the tax or Rs 10,000, whichever is higher; fraud draws the full tax or Rs 10,000.
- Not prosecution: this is a civil penalty; the criminal side, with arrest and imprisonment, is under Section 132.
01What Section 122 covers
The marginal note to Section 122 is "Penalty for certain offences". It is the provision the GST department uses to impose a money penalty on a taxable person who commits one of the defaults the section lists. The section is in several parts: sub-section (1) lists the offences, sub-section (1A) catches those who benefit from some of them, and sub-sections (2) and (3) cover short payment and persons who help an offence along.
A penalty, charged in money
Section 122 does not send anyone to jail. It charges a penalty in rupees. The criminal side of GST, with arrest and prosecution, is dealt with separately under Section 132. The same facts can sometimes attract both.
The penalty is imposed after a proper process, usually following a notice and an order under the demand and penalty provisions of the Act.
02The offences under Section 122(1)
Section 122(1) lists twenty-one specific offences. Common examples include:
- supplying goods or services without issuing an invoice, or issuing an incorrect or false invoice;
- issuing an invoice or bill without an actual supply of goods or services, which is the classic fake-invoice offence;
- collecting tax but failing to pay it to the government beyond three months from the due date;
- taking or using input tax credit without an actual receipt of goods or services;
- obtaining a refund by fraud;
- failing to register when required, or giving false information at registration;
- not keeping the accounts and records required by the Act.
This is only a sample. The full list runs to twenty-one clauses, and the key idea is that each is a defined default in the way GST is charged, collected, credited or recorded.
03The amount of penalty
The penalty depends on which part of Section 122 applies.
| Provision | Situation | Penalty |
|---|---|---|
| Section 122(1) | Any of the 21 listed offences | The higher of Rs 10,000 or the tax evaded, not deducted, not paid, short paid, or the input tax credit wrongly availed or passed on |
| Section 122(2)(a) | Short payment or wrong refund or credit, with no fraud or wilful misstatement | The higher of Rs 10,000 or 10% of the tax due |
| Section 122(2)(b) | Short payment or wrong refund or credit, by reason of fraud or wilful misstatement | The higher of Rs 10,000 or the tax due |
| Section 122(3) | Aiding an offence, dealing with goods liable to confiscation, or failing to appear or produce documents | A penalty up to Rs 25,000 |
So a fraud case carries a penalty equal to the whole tax amount, while a non-fraud short payment carries a lighter penalty of ten per cent of the tax.
04Section 122(1A): those who benefit
Section 122(1A) was inserted to catch the person who actually gains from a fake-invoice or wrongful-credit arrangement, not just the one who issues the paper. It applies where a person retains the benefit of certain transactions, such as an invoice without supply or input tax credit availed without receipt of goods, and at whose instance the transaction is conducted.
The penalty on such a person is equal to the tax evaded or the input tax credit wrongly availed or passed on. This was aimed at the end beneficiaries of fake-invoice rackets.
05Penalty is not prosecution
It helps to keep two tracks separate. Section 122 is about a money penalty. Section 132 is about prosecution, which can mean arrest and imprisonment for serious offences above certain tax thresholds. A penalty under Section 122 can be imposed without any criminal case, and a criminal case under Section 132 is a separate step with its own safeguards.
Many GST disputes start with a demand for tax, interest and penalty. For how tax demands are raised and answered, see Section 73 on demands without fraud and Section 74 on demands involving fraud.
06Practical points
A penalty under Section 122 must follow a fair process, which means a notice, a chance to reply, and a reasoned order. The general discipline on penalties, including that no penalty is imposed without a hearing, applies.
Section 122 is tax law and is not affected by the new criminal codes. The Bharatiya Nyaya Sanhita, Bharatiya Nagarik Suraksha Sanhita and Bharatiya Sakshya Adhiniyam replaced the IPC, CrPC and Evidence Act, but the CGST Act and its penalty provisions continue as before. To follow a GST notice or penalty matter from issue to order, see GST litigation and notice tracking.
07Where Claw fits
Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.
Whether a penalty under Section 122 is sustainable often turns on how tribunals and High Courts have treated a similar default, from fake invoicing to wrongful credit. Claw lets you search more than 30 crore judgments and orders, with Supreme Court rulings from 1950 and High Court rulings from 1990, in under 5 seconds, so you can find how courts have read Section 122 on facts close to yours. You can also track a live GST matter, with its orders and hearings, by party or advocate name across 9,102 courts, benches and forums.
Claw does not use the documents you upload to train its AI models. Create a free Claw account to research Section 122 and to follow a pending matter. To search the wider body of law, see case search across Indian courts.
08Sources and further reading
- CBIC GST (official CGST Act and rules): cbic-gst.gov.in
- India Code (bare text of the CGST Act, 2017): indiacode.nic.in
- GST Council: gstcouncil.gov.in
- Claw: clawlaw.in
This explainer is general information, not legal advice. The law changes through amendments and judgments, so check the current text and take advice from a tax professional or advocate before you act.
09Frequently asked questions
What is Section 122 of the CGST Act?
Section 122 of the Central Goods and Services Tax Act, 2017 lists the GST offences that attract a monetary penalty, such as fake invoicing, wrongful input tax credit, and failing to pay collected tax, and it fixes the amount of the penalty for each.
What penalty does Section 122(1) impose?
For any of the twenty-one listed offences, the penalty is the higher of Rs 10,000 or the amount of tax evaded, not deducted, not paid, short paid, or the input tax credit wrongly availed or passed on.
How much is the penalty for short payment of GST?
Under Section 122(2), where there is no fraud or wilful misstatement, the penalty is the higher of Rs 10,000 or 10% of the tax due. Where there is fraud or wilful suppression, it is the higher of Rs 10,000 or the full tax due.
What is Section 122(1A)?
Section 122(1A), inserted by the Finance Act 2020 and effective from 1 January 2021, imposes a penalty on a person who retains the benefit of certain transactions, such as an invoice without supply or wrongful input tax credit, and at whose instance the transaction is conducted. The penalty equals the tax evaded or the credit wrongly availed.
Is a penalty under Section 122 the same as prosecution?
No. Section 122 imposes a money penalty. Prosecution, with arrest and imprisonment for serious offences, is a separate matter under Section 132. A penalty can be imposed without any criminal case.
Can I find judgments on Section 122 in Claw?
Yes. Claw lets you search more than 30 crore judgments and orders on how Section 122 has been applied, in under 5 seconds, and track a live GST matter by party or advocate across 9,102 courts, benches and forums. It researches and tracks the matter but does not give legal advice.