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

A registered person makes a clerical error in an invoice, which is an error apparent on the face of the record, involving tax of Rs 3,000. There is no fraud or gross negligence. Which statement is correct under section 126?

No penalty can be imposed. The tax involved is below five thousand rupees, so the breach is minor, and an error apparent on the face of the record is easily rectifiable. With no fraudulent intent or gross negligence, section 126(1) prohibits penalty.

  1. AThe officer may impose a penalty up to Rs 25,000 under the general penalty provision
  2. BThe officer cannot impose any penalty because it is a minor breach and the error is easily rectifiableCorrect
  3. CThe officer must impose a penalty equal to the tax involved
  4. DThe officer may impose a penalty only if the person is not heard

Explanation

Tax of Rs 3,000 is below Rs 5,000, so the breach is minor, and an error apparent on the face of the record is easily rectifiable. With no fraud or gross negligence, section 126(1) bars any penalty. The Rs 25,000 general penalty is therefore not available.

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