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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Procedural Compliance under GST

Which statement about penalty under Section 126 of the CGST Act, 2017 is correct?

Voluntary disclosure of a breach to the officer before he discovers it may be considered by the proper officer as a mitigating factor when quantifying the penalty. Hearing is still required, the order must state the breach, and fixed-sum or fixed-percentage penalties are outside the section.

  1. AA penalty may be imposed without hearing if the tax involved is below Rs 5,000
  2. BVoluntary disclosure before the officer discovers the breach may be treated by the proper officer as a mitigating factorCorrect
  3. CThe general disciplines on penalty apply even where the penalty is a fixed sum or fixed percentage
  4. DThe order imposing penalty need not specify the nature of the breach if the amount is quantified

Explanation

Section 126(5) lets the proper officer consider voluntary disclosure, made before the officer discovers the breach, as a mitigating factor. Hearing is mandatory under sub-section (3), and the order must specify the nature of the breach under sub-section (4). Sub-section (6) excludes penalties that are a fixed sum or fixed percentage from the section.

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