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

Kapoor Enterprises voluntarily told the GST officer about a breach before the officer discovered it. The penalty for the breach is not a fixed sum or fixed percentage. Under section 126 of the CGST Act, 2017, which statement is correct?

The proper officer may consider the voluntary disclosure, made before the officer discovered the breach, as a mitigating factor when quantifying the penalty. It is discretionary, so it does not compel a full waiver, and the hearing requirement continues to apply.

  1. AThe proper officer may treat the voluntary disclosure as a mitigating factor when quantifying the penaltyCorrect
  2. BThe proper officer must waive the penalty entirely
  3. CVoluntary disclosure is irrelevant, and the penalty must equal the maximum
  4. DThe proper officer may skip the hearing because of the disclosure

Explanation

Section 126(5) says that where a person voluntarily discloses a breach before the officer discovers it, the proper officer may consider this a mitigating factor when quantifying the penalty. It is discretionary and does not mandate waiver. Section 126(3) still requires an opportunity of being heard before any penalty is imposed.

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