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CS Executive · Tax Laws and Practice · Procedural Compliance under GST

A dealer fails to comply with a provision of the CGST Act for which the Act provides a penalty of a fixed sum of Rs 10,000. The tax involved is Rs 2,000, with no fraud. What is the correct position?

The fixed penalty of Rs 10,000 can be imposed. Section 126(6) excludes the whole section, including the minor breach protection, where the penalty under the Act is a fixed sum or a fixed percentage, so the low tax amount gives no relief.

  1. ASection 126(1) bars the penalty because the tax involved is below Rs 5,000
  2. BSection 126 does not apply because the penalty specified is a fixed sum, so the Rs 10,000 penalty can be imposedCorrect
  3. CThe penalty is reduced to Rs 2,000 as it must match the tax involved
  4. DOnly the voluntary disclosure rule applies and the penalty becomes nil

Explanation

Section 126(6) says the section does not apply where the specified penalty is a fixed sum or a fixed percentage. The minor breach protection of 126(1) therefore does not operate, and the fixed penalty applies. Nothing in the text caps it at the tax involved or makes it nil on disclosure.

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