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

Mehta Traders, a registered person, omitted a digit in an invoice number, an error apparent on the face of record, without fraud or gross negligence. The tax involved is ₹3,200. The penalty prescribed for this default is not a fixed sum or fixed percentage. Under section 126 of the CGST Act, 2017, what is the position?

No penalty can be imposed. The tax involved, ₹3,200, is below ₹5,000, so it is a minor breach, and an error apparent on the face of record is easily rectifiable. With no fraud or gross negligence, section 126(1) prohibits penalty.

  1. AA penalty may be imposed because every documentation error attracts penalty
  2. BNo penalty may be imposed, as it is a minor breach (tax below ₹5,000) and the error is easily rectifiableCorrect
  3. CNo penalty may be imposed only if Mehta Traders has a public compliance rating
  4. DA penalty may be imposed, but only after a personal hearing

Explanation

Section 126(1) bars penalty for minor breaches and easily rectifiable errors made without fraudulent intent or gross negligence. A breach is minor if tax involved is below ₹5,000, and an error apparent on record is easily rectifiable. Here both conditions hold, so no penalty applies. Hearing is relevant only where a penalty is imposed.

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