TIME LIMIT FOR ISSUE NOTICE U/S 122

[ajay chharia]

SIR,

IS THERE ANY TIME LIMIT FOR ISSUING NOTICE U/S 122 OF THE CGST ACT, 2017

 

[Sadanand Bulbule]

There is no time limit fixed to levy penalty under Section 122. However incontrovertible evidence is required to be placed on record to allege the commission of specific offence before issuing SCN. And this alone decides the precise amount of penalty to be levied for the gravity of each offence. Further there is immunity from levying penalty under Section 75(13) and explanation-ii appended to Section 74 and Section 74A.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, In a few words, your message is loud and clear.

[Shilpi Jain]

Penalty under law needs to be demanded by issuance of SCN u/s 73 or 74. So the time lines mentioned in those sections should apply for penalty under 122 also.

[Shilpi Jain]

Logically department cannot have unlimited time to demand anything. Though an exception would be any amount collected as GST and not remitted. 

[Sadanand Bulbule]

As already mentioned, once the proceedings under Section 73, 74 and 74A are concluded, no penalty could be levied under Section 122 in view of the specific embargo under Section 75(13)on the same taxpayer. However Section 122 can be enlarged to other offences subject to other governing provisions.

[Sadanand Bulbule]

For academic interest:

2025 (4) TMI 933 - DELHI HIGH COURT - SUNIL GULATI VERSUS ADDITIONAL COMMISSIONER CGST DELHI SOUTH COMMISSIONERATE & ANR.

Imposition of penalty by the CGST Department under Section 122(1A) of the CGST Act - vailability of an appellate remedy under Section 107 of the CGST Act - HELD THAT:- The stand of other entities and individuals against whom demands have been raised and penalties have been imposed may also be necessary in the adjudication in the present case. The appellate jurisdiction would be the appropriate jurisdiction to comprehensively adjudicate the matter.

In so far as the stand of the Petitioner that he has not retained the benefit of any transaction is concerned, the same would also be a factual issue which cannot be gone into in writ jurisdiction by this Court. The Petitioner would be free to raise this issue in appeal. Further, the argument that penalty could not have been imposed on the Petitioner for the Financial Years from 2017 can also be raised in appeal by the Petitioner.

Conclusion - Considering that all the issues which have been raised can be clearly raised before the appellate authority, this is a fit case for directing the Petitioner to avail of his remedies under Section 107 of the CGST Act. Entertaining the present writ petition would in fact mean that all the factual issues would have to be gone into by this Court which would not be permissible. The Petitioner had full knowledge of the proceedings in the SCN.

Petition disposed off.

[Omprakash Agarwalla]

In my opinion, no notice or order can be and should be passed under section 122. Penalty under GST laws (CGST) can only be levied under the proceedings of  Sections 62, 63, 64, 73, 129, 130, and 127,.

CA. O. P. Agarwalla, Guwahati

[Sadanand Bulbule]

Dear Agarwal Sir

Plz elaborate why notice or order under Section 122 should not be passed? Then what is the significance of Section 122? 

[Omprakash Agarwalla]

Section 127: 

127. Where the proper officer is of the view that a person is liable to a penalty and the same is not covered under any proceedings under section 62 or section 63 or section 64 or section 73 or section 74 1[or section 74A] or section 129 or section 130, he may issue an order levying such penalty after giving a reasonable opportunity of being heard to such person.

Opinion:

Section 122 of the CGST Act, 2017, is a penal provision and does not independently authorize the issuance of a show cause notice or initiation of adjudicatory proceedings. The Act envisages that penalties under Sections 122, 122A, 122B, 123, 124, and 125 must be levied through proceedings initiated under specific procedural provisions, i.e., Sections 62, 63, 64, 73, 129, 130, and 127, depending upon the nature of the alleged contravention.

While Rule 142(1) of the CGST Rules, 2017 makes reference to the issuance of notice under Section 122, it is a settled principle of law that rules are subordinate legislation and cannot override the substantive provisions of the parent statute. In the event of any inconsistency or conflict between the Act and the Rules, the provisions of the Act shall prevail. Therefore, initiating proceedings directly under Section 122, without recourse to the appropriate procedural mechanism prescribed under the Act, is ultra vires the statutory scheme and legally unsustainable.

[Omprakash Agarwalla]

I welcome other views

AI Summary

Notice under Section 122 of the CGST Act cannot be issued independently; penalties must follow prescribed adjudicatory procedures. Section 122 is a penal provision and does not independently authorise issuance of a show cause notice; penalties under Sections 122, 122A, 122B, 123, 124 and 125 must be imposed through the specific adjudicatory procedures prescribed elsewhere in the statute (for example, the scheme in Sections 62, 63, 64, 73, 127, 129 and 130). A rule referring to direct notice under Section 122 cannot override the parent Act; initiating proceedings solely under Section 122 is ultra vires the statutory scheme and legally unsustainable.