GENERAL DISCIPLINE RELATED TO PENALTY - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

7. GENERAL DISCIPLINE RELATED TO PENALTY 7.1 Section 126 of the CGST Act, 2017 deals with General disciplines related to Imposition of penalty. It says that penalty is not to be imposed for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in the documentation which is easily rectifiable and made without fraudulent intent or gross violations. It explains the circumstances as mentioned below, under which a breach and omission or mistake can be considered. (a) a breach shall be considered a minor breach if the amount of tax involved is less than five thousand rupees; (b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record. 7.2 Section 126 of the CGST Act, 2017 lays down the general principles for imposing penalty, as under (i) The penalty imposed under this Act shall depend on the facts and circumstances of each case and shall be commensurate with the degree and severity of the breach. (ii) When a penalty is proposed to be imposed, the offender will be sent a notice and given a fair opportunity to be heard by the tax officials. (iii) The tax authorities will give the offender a summary of the reasons for the penalty and the legal provisions under which the penalty is imposed. (iv) If the offender chooses to voluntarily disclose infringement of law, the tax authorities may use the disclosure as leverage to reduce the penalty. 7.3 The provisions of this section shall not apply in cases where the penalty specified is either a fixed sum or expressed as a fixed percentage.