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Goods and Services Tax (GST) and Corporate Tax Planning · Inspection, Search, Seizure, Offences and Penalties

Offences under GST: Section 132 CGST Punishment

Updated 11 October 2026 · Fact-checked

Section 132 of the CGST Act lists the offences that attract prosecution, such as supplying without invoice with intent to evade tax, fake invoices, wrongful input tax credit, and non-payment of collected tax. Punishment depends on the tax amount involved: above ₹500 lakh, up to five years and fine. Section 138 allows compounding with conditions.

Understand Offences under GST

Penalty under GST is a civil consequence. An offence under section 132 is criminal. It leads to prosecution, imprisonment and fine. So you must separate the two in every answer.

Section 132(1) lists the acts that are offences. Examples: supplying goods or services without invoice with intention to evade tax (clause a); issuing an invoice without supply, leading to wrongful ITC or refund (clause b); availing ITC on such an invoice or fraudulently without any invoice (clause c); collecting tax but not paying it to the Government beyond three months from the due date (clause d); evading tax or fraudulently obtaining refund where not covered by (a) to (d) (clause e); falsifying records or giving false information with intent to evade tax (clause f); dealing with goods known or believed to be liable to confiscation (clause h); dealing with services known or believed to be in contravention of the Act (clause i); and attempting or abetting these offences (clause l). Clauses (g), (j) and (k) were omitted from 1 October 2023.

The punishment depends on the amount of 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). For clause (f), imprisonment up to six months or fine or both.

For a repeat conviction, imprisonment may extend to five years and fine. Imprisonment under clauses (i), (ii) and (iii) and for repeat offenders is, absent special and adequate reasons recorded in the judgment, not less than six months.

Most offences are non-cognizable and bailable. The exception: offences under clauses (a), (b), (c) or (d) punishable under clause (i), meaning tax above ₹500 lakh. These are cognizable and non-bailable. Prosecution needs the previous sanction of the Commissioner. Under the IGST Act, section 20 applies the CGST provisions on offences and penalties to integrated tax.

Key rules to remember

Punishment above ₹500 lakh
Tax evaded / ITC wrongly availed or utilised / refund wrongly taken > ₹500 lakh → imprisonment up to 5 years and fine
Section 132(1)(i). Offences under clauses (a) to (d) at this level are cognizable and non-bailable.
Punishment above ₹200 lakh up to ₹500 lakh
₹200 lakh < amount ≤ ₹500 lakh → imprisonment up to 3 years and fine
Section 132(1)(ii).
Punishment above ₹100 lakh up to ₹200 lakh
₹100 lakh < amount ≤ ₹200 lakh → imprisonment up to 1 year and fine
Section 132(1)(iii). Applies only to an offence under clause (b).
False records or information
Clause (f) → imprisonment up to 6 months or fine or both
Section 132(1)(iv).
Repeat conviction and minimum term
Second or later conviction → up to 5 years and fine; minimum 6 months unless special and adequate reasons are recorded
Section 132(2) and (3). The minimum applies to clauses (i), (ii), (iii) and sub-section (2).
Cognizable and non-bailable offences
Clauses (a), (b), (c), (d) punishable under clause (i) → cognizable, non-bailable; all others → non-cognizable, bailable
Section 132(4) and (5).
Compounding amount
Minimum 25% of tax involved; maximum 100% of tax involved
Section 138(2). Tax, interest and penalty must be paid first.

How to solve Offences under GST questions

Use this order for any offence question. It mirrors the provision, facts, conclusion format examiners expect.

  1. 1Identify the act in the facts and match it to a clause of section 132(1). Quote the clause.
  2. 2Check the mental element: intention to evade tax, knowledge or reason to believe, or fraud. Clause (a) needs intention to evade.
  3. 3Find the amount: tax evaded, ITC wrongly availed or utilised, or refund wrongly taken. Remember that CGST, SGST, IGST, UTGST and cess are all counted.
  4. 4Place the amount in the slab and state the imprisonment and fine. Check that the ₹100 to ₹200 lakh slab applies only to clause (b).
  5. 5State cognizable or bailable status using section 132(4) and (5).
  6. 6Note procedure: prosecution needs previous sanction of the Commissioner.
  7. 7Examine compounding under section 138: the bars, the payment of tax, interest and penalty first, and the 25% to 100% range.
  8. 8Conclude clearly with the punishment and advice.

Quickest way: Clause, amount, status, compounding

When to use it: Use this when the question gives an amount and asks about punishment or arrest in a few lines.

  1. Write the clause letter.
  2. Compare the amount with ₹100, ₹200 and ₹500 lakh.
  3. Write the term and fine, and add the six-month minimum.
  4. Add cognizable and non-bailable only if clause (a) to (d) and above ₹500 lakh.
  5. Add one line on compounding: bars and 25% to 100%.

Common mistakes in Offences under GST

  • Treating the lowest slab as applying to every offence

    Students memorise the three amounts without the clause condition.

    Fix: Remember that the ₹100 to ₹200 lakh slab is only for clause (b). Other offences in that range are not covered by that slab.

  • Saying all GST offences are non-bailable

    Students remember the serious category and overgeneralise.

    Fix: Only clauses (a) to (d) punishable under clause (i), above ₹500 lakh, are cognizable and non-bailable. The rest are non-cognizable and bailable.

  • Listing omitted clauses (g), (j) and (k) as offences

    Older notes still show them.

    Fix: These were omitted from 1 October 2023. Do not list them as current offences.

  • Ignoring the bars to compounding

    Students think any offence can be compounded freely.

    Fix: Section 138 does not apply to a person allowed to compound once for clauses (a) to (f), (h), (i) and (l), to anyone accused under clause (b), or to one convicted by a court. Tax, interest and penalty must be paid first.

  • Mixing penalty with prosecution

    Both follow the same act of evasion.

    Fix: Write them separately. Penalty is a civil levy. Prosecution under section 132 needs the Commissioner's sanction.

  • Counting only CGST in the amount

    The question names the Central Act only.

    Fix: The Explanation says tax includes amounts under the CGST, SGST, IGST and UTGST Acts and cess.

Worked examples

Example 1

Sunrise Traders Pvt. Ltd., Pune, issues invoices without any actual supply of goods or services. Recipients wrongly avail input tax credit of ₹1,50,00,000 on these invoices. Which clause applies, what is the punishment, and is the offence bailable?

Show the solution
  1. Issuing invoices without supply, leading to wrongful availment of ITC, is an offence under section 132(1)(b).
  2. Amount of ITC wrongly availed: ₹1,50,00,000 = ₹150 lakh.
  3. Compare with the slabs: ₹150 lakh does not exceed ₹500 lakh, and it does not exceed ₹200 lakh. It does exceed ₹100 lakh.
  4. The ₹100 lakh to ₹200 lakh slab in section 132(1)(iii) applies only to an offence under clause (b). This is a clause (b) offence, so the slab applies.
  5. Punishment under section 132(1)(iii): imprisonment up to one year and fine.
  6. Under section 132(3), the imprisonment is not less than six months unless special and adequate reasons are recorded in the judgment of the Court.
  7. Section 132(5) makes an offence cognizable and non-bailable only if it is punishable under clause (i). This one is punishable under clause (iii), so section 132(4) applies and it is non-cognizable and bailable.
  8. Prosecution requires the previous sanction of the Commissioner under section 132(6).

Answer: The offence falls under section 132(1)(b). Because the ITC of ₹150 lakh exceeds ₹100 lakh but not ₹200 lakh, section 132(1)(iii) applies. Punishment is imprisonment up to one year and fine, with a minimum of six months absent recorded special and adequate reasons. The offence is non-cognizable and bailable under section 132(4), and prosecution needs the Commissioner's previous sanction.

Example 2

Meera Enterprises collected GST of ₹6,20,00,000 from customers over the year and did not deposit it with the Government for more than three months after the due date. State the offence, punishment and status.

Show the solution
  1. Collecting tax and not paying it beyond three months from the due date is an offence under section 132(1)(d).
  2. The amount is ₹620 lakh, which exceeds ₹500 lakh.
  3. Punishment under clause (i): imprisonment up to five years and fine.
  4. Under section 132(3), imprisonment is not less than six months unless special and adequate reasons are recorded in the judgment.
  5. Clause (d) punishable under clause (i) is cognizable and non-bailable under section 132(5).
  6. Prosecution requires the previous sanction of the Commissioner.

Answer: Offence under section 132(1)(d). Punishable with imprisonment up to five years and fine, with a minimum of six months absent recorded special and adequate reasons. The offence is cognizable and non-bailable, and prosecution needs the Commissioner's previous sanction.

Exam tips

  • Learn the slab table with clause letters. Examiners test the clause (b) condition for the ₹100 to ₹200 lakh range.
  • Always state the amount in lakh and compare it with 100, 200 and 500 before choosing the slab.
  • Write the six-month minimum and its exception in every punishment answer.
  • For compounding, list the bars from section 138(1) proviso, then the 25% to 100% range and the payment-first condition.
  • Do not quote a section number you are unsure of. Cite section 132, 138 and IGST section 20 only.

Practice questions from Inspection, Search, Seizure, Offences and Penalties

Offences 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 under GST: frequently asked questions

What is the punishment for GST offence exceeding ₹5 crore?

Where the tax evaded, ITC wrongly availed or utilised, or refund wrongly taken exceeds ₹500 lakh, section 132(1)(i) provides imprisonment up to five years and fine. If the offence is under clause (a), (b), (c) or (d), it is cognizable and non-bailable.

Can GST offences be compounded under section 138?

Yes, before or after prosecution, by the Commissioner, on payment of the compounding amount. It is not available to those already allowed to compound once for specified clauses, those accused under clause (b), or those convicted by a court. Tax, interest and penalty must be paid first.

What is the compounding amount under section 138?

It is prescribed, but it cannot be less than 25% of the tax involved or more than 100% of the tax involved. On payment, no further proceedings are initiated for the same offence and pending criminal proceedings abate.

Is prior sanction needed to prosecute under GST?

Yes. Section 132(6) says a person cannot be prosecuted for an offence under that section without the previous sanction of the Commissioner.