What does this section say?

Section 123 of the CGST Act deals with penalties applicable when a person who is legally required to furnish an Information Return fails to do so within the prescribed time. Under GST law, certain authorities, government departments, local bodies, banks, financial institutions, registrars, and other specified persons may be required to provide information relating to transactions carried out by taxpayers. Such information helps the GST department verify compliance, detect tax evasion, and cross-check the correctness of returns filed by taxpayers.

If a person fails to furnish the required information return, the proper officer may issue a notice directing such person to submit the return within a specified period. If the person still fails to comply with the notice, a penalty of ₹100 per day is leviable for every day during which the failure continues. The penalty is calculated from the date immediately after the expiry of the period specified in the notice and continues until compliance is achieved, subject to the maximum limit prescribed under the law.

The purpose of this section is not merely to punish non-compliance but to ensure the availability of accurate information for tax administration. Information returns play a crucial role in identifying mismatches, detecting suspicious transactions, and strengthening revenue collection mechanisms. Therefore, timely submission of such information is essential for effective GST implementation.

Penalty under Section 123

• ₹100 per day for the period during which the failure continues.
• Maximum penalty: ₹5,000.

Example

A government authority required to furnish transaction details under GST receives a notice but fails to submit the information return. A daily penalty may be imposed until compliance is made.

Key Points

• Applies to persons required to furnish Information Returns.
• Penalty is ₹100 per day of default.
• Levied after non-compliance with a notice.
• Helps GST authorities verify taxpayer information.

One-Line Summary

Section 123 imposes a daily penalty on persons who fail to furnish Information Returns as required under GST law.