Indirect Tax Laws and Practice · Inspection, Search, Seizure, Arrest and Prosecution

Offences and Penalties under GST: Section 132 Explained

Updated 11 October 2026 · Fact-checked

Section 132 of the CGST Act lists the GST offences, such as supplying without invoice, issuing fake invoices, availing fraudulent ITC and not paying collected tax for over three months. Punishment depends on the offence and the amount of tax evaded: up to five years and fine above ₹500 lakh, with lower bands below it.

Understand Offences and Penalties under GST

GST has two separate tracks for wrongdoing. Penalty is a civil money charge imposed by the tax officer through adjudication. Prosecution is a criminal case under Section 132, where the punishment is imprisonment and/or fine imposed by a court. The same act can attract both.

Section 132(1) lists the offences. Main ones: supplying goods or services without an invoice with intent to evade tax (clause a); issuing an invoice without any supply, leading to wrongful ITC or refund (b); availing ITC on such an invoice, or fraudulently availing ITC without any invoice (c); collecting tax but not paying it to the Government beyond three months from the due date (d); evading tax or fraudulently obtaining refund where clauses (a) to (d) do not apply (e); falsifying records, producing fake accounts or documents, or giving false information to evade tax (f); dealing with goods you know or have reason to believe are liable to confiscation (h); dealing with supplies of services you know or have reason to believe contravene the Act (i); and attempting or abetting offences in clauses (a) to (f), (h) and (i) (l). Clauses (g), (j) and (k) were omitted from 1 October 2023.

The punishment depends on the amount involved, meaning tax evaded, ITC wrongly availed or utilised, or refund wrongly taken. Above ₹500 lakh: imprisonment up to five years and fine. Above ₹200 lakh up to ₹500 lakh: up to three years and fine. Above ₹100 lakh up to ₹200 lakh: up to one year and fine, but only for an offence under clause (b). Clause (f) (and its abetment) carries up to six months, or fine, or both.

For a repeat conviction, punishment for the second and every later offence can extend to five years and fine. In slabs (i), (ii), (iii) and for repeat offenders, the court must impose at least six months unless it records special and adequate reasons otherwise.

Most offences are non-cognizable and bailable. The exception is an offence under clause (a), (b), (c) or (d) that is punishable under clause (i), that is, above ₹500 lakh. That is cognizable and non-bailable. No one can be prosecuted without the previous sanction of the Commissioner.

Key rules to remember

Above ₹500 lakh: Imprisonment up to 5 years + fine; Section 132(1)(i). Applies to the offences listed in 132(1), based on tax evaded, ITC wrongly availed or utilised, or refund wrongly taken.
₹200 lakh to ₹500 lakh: Amount > ₹200 lakh and ≤ ₹500 lakh: imprisonment up to 3 years + fine; Section 132(1)(ii).
₹100 lakh to ₹200 lakh: Amount > ₹100 lakh and ≤ ₹200 lakh: imprisonment up to 1 year + fine; Section 132(1)(iii). Only for an offence under clause (b), the fake invoice offence.
False records (clause f): Imprisonment up to 6 months, or fine, or both; Section 132(1)(iv). Applies to committing or abetting clause (f).
Repeat conviction: Up to 5 years + fine for second and every later offence; Section 132(2).
Minimum term: Not less than 6 months, unless special and adequate reasons are recorded; Section 132(3). Applies to imprisonment under (i), (ii), (iii) and sub-section (2).
Cognizable and non-bailable: Clause (a), (b), (c) or (d) AND punishable under clause (i) (> ₹500 lakh); Section 132(5). All other offences are non-cognizable and bailable under 132(4).
Sanction: No prosecution without previous sanction of the Commissioner; Section 132(6).

How to solve Offences and Penalties under GST questions

Use this order for any question on GST offences and punishment.

1Identify the act: no invoice, fake invoice, fraudulent ITC, tax collected but unpaid, false records, dealing in liable goods, and so on.
2Match it to a clause of Section 132(1) and note the intent or knowledge required.
3Compute the amount that counts: tax evaded, ITC wrongly availed or utilised, or refund wrongly taken. Include CGST, SGST, IGST, UTGST and cess, as the Explanation says.
4Place the amount in the slab: above ₹500 lakh, ₹200 to ₹500 lakh, or ₹100 to ₹200 lakh (clause b only). Check for clause (f) separately.
5State the punishment, including the six-month minimum rule and the repeat-offender rule if relevant.
6Decide cognizable or bailable status using Section 132(4) and (5).
7Mention the need for the Commissioner's sanction and, if asked, whether compounding is possible.

Quickest way: Clause, amount, status

When to use it: Use in MCQs and short case questions where you must name the punishment quickly.

Name the clause from the act described.
Read the amount and pick the band: more than 500, 200 to 500, or 100 to 200 lakh.
Check the special cases: clause (b) is the only one punished in the 100 to 200 lakh band; clause (f) has the 6-month punishment.
Check status: non-bailable only for clauses (a) to (d) above ₹500 lakh.

Common mistakes in Offences and Penalties under GST

Applying the ₹100 lakh to ₹200 lakh band to every offence.
Students remember three bands and assume all offences use them.
Fix: That band applies only to a clause (b) offence. Other offences below ₹200 lakh are not covered by slabs (i) to (iii).
Saying all offences above ₹500 lakh are non-bailable.
Students remember the five-year punishment and link it to non-bailable status.
Fix: Non-bailable status needs clause (a), (b), (c) or (d) and punishment under clause (i). A clause (e) offence above ₹500 lakh is still non-cognizable and bailable.
Confusing penalty with prosecution.
Both follow from the same default.
Fix: Penalty is civil and imposed by the tax officer. Prosecution is criminal and decided by a court. One does not replace the other.
Forgetting the three-month period in clause (d).
Students treat any delay in paying collected tax as an offence.
Fix: Clause (d) applies only where tax is collected and not paid beyond three months from the date payment became due.
Listing omitted clauses (g), (j), (k) as offences.
Older notes still show them.
Fix: They were omitted from 1 October 2023. Do not list them.
Ignoring the minimum six-month term.
Students quote only the maximum.
Fix: Mention that the term cannot be less than six months in the slabs and repeat cases unless the court records special and adequate reasons.

Worked examples

Example 1

Ravi Traders, Pune, issues invoices worth tax of ₹320 lakh to Shree Metals without any supply of goods. Shree Metals avails ITC of ₹320 lakh on these invoices. Discuss the offences, punishment and nature of the offences under Section 132.

Show the solution

Ravi Traders issues invoices without supply, leading to wrongful ITC: this is clause (b).
Shree Metals avails ITC using such invoices: this is clause (c).
The amount is ₹320 lakh, which is above ₹200 lakh and not above ₹500 lakh. Slab (ii) applies.
Punishment for each: imprisonment up to three years and fine, with a minimum of six months unless the court records special and adequate reasons.
Status: the cognizable and non-bailable rule needs punishment under clause (i), which is above ₹500 lakh. Here it is slab (ii), so the offences are non-cognizable and bailable.
Prosecution needs the previous sanction of the Commissioner.

Answer: Ravi Traders commits a clause (b) offence and Shree Metals a clause (c) offence. Each is punishable with up to three years' imprisonment and fine (minimum six months absent special reasons). Both are non-cognizable and bailable, and prosecution needs the Commissioner's sanction.

Example 2

Mehta Enterprises collected GST of ₹60 lakh from customers, which became payable on 20 January. It has not deposited it even on 30 April of the same year. Is an offence committed under Section 132? Also state the punishment if the person is convicted.

Show the solution

Tax was collected and the payment fell due on 20 January.
Three months from the due date ends on 20 April.
Non-payment beyond that period, here till 30 April, makes it clause (d).
The amount is ₹60 lakh. It is not above ₹100 lakh, so slabs (i), (ii) and (iii) do not cover it, and clause (d) is not covered by slab (iii), which is only for clause (b).
The text supplied gives no imprisonment band for clause (d) below ₹200 lakh, so state only that the offence is established and the Commissioner's sanction is needed. Status is non-cognizable and bailable, since it is not punishable under clause (i).

Answer: Yes, a clause (d) offence is committed because the collected tax stayed unpaid beyond three months of the due date. At ₹60 lakh it falls below the amounts for which Section 132(1)(i) to (iii) provide imprisonment for clause (d). The offence is non-cognizable and bailable, and prosecution needs the Commissioner's sanction.

Exam tips

In MCQs, the usual traps are the band limits (₹100, ₹200, ₹500 lakh) and whether the amount is 'exceeds' or 'does not exceed'. Read the boundary carefully.
Link every punishment with its cognizable or bailable status. Case questions often ask both.
Remember that the ₹100 to ₹200 lakh band is only for clause (b).
In case scenarios, name the clause and the intent or knowledge element before stating punishment.
If a question mentions payment of tax and a request for compounding, link this topic with the compounding rules.

Practice questions from Inspection, Search, Seizure, Arrest and Prosecution

Offences and Penalties under GST in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Offences and Penalties under GST: frequently asked questions

What is the difference between penalty and prosecution under GST?

Penalty is a civil monetary charge imposed by the tax authority after adjudication. Prosecution is a criminal proceeding under Section 132 in a court, leading to imprisonment and/or fine. Prosecution requires the previous sanction of the Commissioner.

Which GST offences are cognizable and non-bailable?

Offences under clause (a), (b), (c) or (d) of Section 132(1) that are punishable under clause (i), meaning the amount exceeds ₹500 lakh. All other offences under the Act are non-cognizable and bailable.

Is there a minimum imprisonment under Section 132?

Yes. For imprisonment under clauses (i), (ii) and (iii) and for repeat convictions, the term must be at least six months. The court can go lower only by recording special and adequate reasons in the judgment.

Can GST offences be compounded?

Section 138 allows compounding of offences by the Commissioner, with exceptions such as a person accused of a clause (b) offence, or a person convicted by a court. Tax, interest and penalty must be paid before compounding.