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Section 132 of GST – Punishment for certain offences
Statutory provision
(1) Whoever commits any of the following offences, namely:-
- (a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;
- (b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;
- (c) avails input tax credit using such invoice or bill referred to in clause (b);
- (d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
- (e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d);
- (f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act;
- (g) obstructs or prevents any officer in the discharge of his duties under this Act;
- (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder;
- (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;
- (j) tampers with or destroys any material evidence or documents;
- (k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or
- (l) attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) to
- (k) of this section
shall be punishable –
- (i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine;
- (ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine;
- (iii) in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine;
- (iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
(2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.
(3) The imprisonment referred to in clauses (i), (ii) and (iii) of sub-section (1) and sub-section (2) shall, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six months.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), all offences under this Act, except the offences referred to in sub-section (5) shall be non- cognizable and bailable.
(5) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub- section (1) and punishable under clause (i) of that sub-section shall be cognizable and non-bailable.
(6) A person shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner.
Explanation. — For the purposes of this section, the term “tax” shall include the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or refund wrongly taken under the provisions of this Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act and cess levied under the Goods and Services Tax (Compensation to States) Act.
Analysis and Updates
Introduction
This section talks about cases of tax evasion and penal actions applicable on specific events subject to amount of tax sought to be evaded. This provision provides for prosecution of offenders and the punishment initiated on them. In the normal course prosecution is the institution or commencement of criminal proceeding, the process of exhibiting formal charges against an offender before a legal tribunal and pursuing them to final judgement on behalf of the State or Government or by indictment or information.
Analysis
(A) In this section the law makers have identified situations whereby, there can be a leakage of Government revenue and have thus, penned down 12 such situations of mala fide intent which are as follows:
- (a) Supply of goods or services or both without the cover of invoice with an intent to evade tax;
- (b) If any person issues any invoice or bill without actual supply of goods or services or both leading to wrongful input tax credit or refund of tax;
- (c) Any person who avails input tax credit using invoice referred in point (b) above;
- (d) Collection of taxes without payment to the Government for a period beyond 3 months of due date;
- (e) Evasion of tax, availment of credit or obtaining refund with intent of fraud where such offence is not covered in clause (a) to (d) above;
- (f) Falsifying financial records or production of false records/ accounts/ documents/ information with an intent to evade tax;
- (g) Obstructs or prevents any officer from doing his duties under this Act;
- (h) Acquires or transports or in any other manner deals with any goods which he knows or has reasons to believe are liable for confiscation under this Act or rules made thereunder;
- (i) Receives or in any way, deals with any supply of services which he knows or has reason to believe are in contravention of any provisions of this law;
- (j) Tampers with or destroys any material evidence or documents;
- (k) Fails to supply any information which he is required to supply under this law or supply false information;
- (l) Attempts or abets the commission of any of the offences mention above.
This section enables institution of prosecution proceedings against the offenders and the period of imprisonment and quantum of fine varies depending on the amount of tax evaded or seriousness of the offence as listed below.
| Amount of Tax evaded/ erroneous refund/ wrong ITC availed or utilized | Fine | Imprisonment |
| Exceeding 5 Crores | Yes | Upto 5 years |
| 2 Crores – 5 Crores | Yes | Upto 3 years |
| 1 Crores – 2 Crores | Yes | Upto 1 year |
(B) If any person commits any offence specified in clause (f), (g) or (j) above, he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
(C) In case of repetitive offences without any specific/ special reason which is recorded in the judgment of the Court will entail an imprisonment term of not less than 6 months and which could extend to 5 years plus with a fine.
(D) All offences mentioned in this section are non-cognizable and bailable except the following cases:
- a. Where the amount exceeds Rs 5 Crores and
- b. Instances covered by (a) to (d) in Para A.
(E) Every prosecution proceeding initiated requires prior sanction of the Commissioner.
(F) The explanation to this section state that “tax” includes which are levied under CGST, SGST, UTGST, and GST Compensation cess Act. Basically, it includes the amount of tax evaded, amount of input tax credit wrongly availed or utilized or refund wrongly taken under the Act.
G. Reference may be had to the discussion under section 122 regarding ‘ingredients’ to impose penalty contrasted with the admission of unpaid taxes. Prosecution under section 132 proceeds as a natural consequence of establishment of the ingredients in section 122 (for the stated offences from clause (i) to (iv) in section 122(1)) and the value being above the threshold specified. Further, it is seen in Vimal Yashwantgiri Goswami vs State of Gujarat (SCA 13679 of 2019) where Guj. HC laid down some guidance against placing persons under arrest under section 69 in a routine manner without first establishing whether basic ingredients of offence are not established, person cannot be detained. With the Economic Offences (Inapplicability of Limitation) Act, 1974, there is no urgency to prosecute before completion of adjudication proceedings on the basic tax demand and penalty;
H. Prosecution must be undertaken in accordance with the due process prescribed under Cr.PC before a Magistrate. Authority in Adani Enterprises Ltd. & Ors. v. UoI & Ors. In 2019-TIOL-2408-MUM-CUS may be referred where proceedings under any special law in the absence of a ‘procedure code’ must fall on Cr.PC.
I. Care must be taken to briefly read section 436 and 438 of Cr.PC. To detain a person (before conclusion of trail) is to deprive a person of his ‘right to lift’ under article 21. So, for a person to be enlarged (or set free) on bail is a ‘right’ under the Constitution. To deny this right is permitted in special circumstances. Persons may be arrested under section 41 of Cr.PC if the offence is bailable or non-bailable. In case of bailable offences, then after arrest immediately, the arresting officer is empowered to release the arrested person on bail. In case of non-bailable offences, then the person arrested must be produced within 24 hours before a Magistrate who will set the bail.
J. It is in the case of non-bailable offences that anticipatory bail is granted under section 438. It means that the person must be enlarged ‘at the very moment’ of arrest (Naresh Kumar Yadav v. Ravindra Kumar (2008) 1 SCC 632). Conditions imposed while granting anticipatory bail may sometimes be so onerous or restricting travel movements that is may require careful consultations with legal advisors whether the apprehension of arrest is real or not and whether anticipatory bail should or should not be sought. Some States have made amendments to the Cr.PC provisions so as to render section 438 inapplicable, for eg. In State of UP, section 438 is omitted in its implementation;
K. Reference may also be had to section 441 regarding ‘bonds and sureties’ and various types of ‘remand’. Understanding some of these provisions will take away fear and anxiety and bring in clarity regarding the degree of proof required to (i) detain a person and (ii) prosecute a person. In India, being remanded to police custody or judicial custody is seen as a person would be social boycott or ostracize a person. And if it is resorted to in unmerited cases, it may do more harm than good. Section 57 of Cr.PC makes it clear that detention should not be for more than 24 hours and then section 167 takes over to protect the ‘right’ of the detainee which states that maximum duration of detention pending investigation cannot exceed 90 days.
Comparative Review
The old Central and State level indirect tax laws cover prosecution powers.
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