Section 123 of the Central Goods and Services Tax Act, 2017 deals with the penalty for failure to furnish an information return required under Section 150 of the CGST Act.
The provision is part of Chapter XIX – Offences and Penalties. It applies where a person who is legally required to furnish an information return under Section 150 fails to furnish that return within the period specified in a notice issued under Section 150(3).
The penalty prescribed under Section 123 is ₹100 for every day during which the failure continues, subject to a maximum penalty of ₹5,000. The penalty is not imposed automatically merely because an information return was not initially furnished. Section 123 provides that the proper officer may direct the person to pay the penalty after the statutory notice mechanism under Section 150 has been followed.
What Is Section 123 of the CGST Act?
Section 123 is titled “Penalty for failure to furnish information return.”
The provision states that where a person required to furnish an information return under Section 150 fails to do so within the period specified in the notice issued under Section 150(3), the proper officer may direct that the person shall be liable to pay:
- ₹100 per day for every day during which the failure continues; and
- the total penalty cannot exceed ₹5,000.
Section 123 therefore needs to be read together with Section 150, because Section 150 identifies the obligation to furnish the information return and provides the notice mechanism.
Simple Meaning of Section 123
In simple terms, Section 123 works like this:
Section 150 creates the information-return obligation → Section 150(3) allows a notice when the required information return is not furnished → Section 123 provides the penalty for continuing failure after the notice period.
Therefore, a person should not look at Section 123 in isolation.
The section is specifically connected with the information-return mechanism under Section 150.
Who Can Be Required to Furnish an Information Return?
Section 150 covers specified persons and entities that maintain records containing information relevant to GST administration.
The provision includes, among others, categories such as:
- taxable persons;
- local authorities and other public bodies or associations;
- authorities responsible for collection of VAT, sales tax or State excise duty;
- authorities responsible for collection of central excise or customs duty;
- income-tax authorities;
- banking companies;
- State Electricity Boards and electricity distribution or transmission licensees;
- registrars and sub-registrars;
- registrars under the Companies Act;
- registering authorities for motor vehicles;
- authorities responsible for registration of immovable property;
- the Collector under the land acquisition law;
- recognised stock exchanges;
- depositories;
- specified officers of the Reserve Bank of India;
- GST Network;
- persons granted a Unique Identity Number; and
- other persons that may be specified by the Government on the recommendation of the GST Council.
The purpose is to enable the GST administration to obtain relevant information from persons or organisations that maintain records of transactions, registrations, accounts, tax payments, bank accounts, electricity consumption, purchases, sales, property transactions and other specified activities.
What Is an Information Return?
An information return under Section 150 is not the same thing as the regular GST return filed by a registered taxpayer.
A normal GST return generally contains information about a taxpayer’s own GST liabilities and transactions.
An information return under Section 150 is designed to provide information to the tax administration from specified persons or entities that maintain relevant records.
Section 150 covers information relating to matters such as:
- registration;
- accounts;
- periodic returns;
- tax payments;
- transactions in goods or services;
- bank account transactions;
- electricity consumption;
- purchase or sale of goods;
- purchase or sale of property; and
- rights or interests in property.
This information can assist the GST administration in identifying and verifying transactions relevant to tax compliance.
Section 150 – The Provision Connected With Section 123
To understand Section 123 properly, it is necessary to understand the mechanism under Section 150.
Section 150(1) provides that specified persons responsible for maintaining the prescribed records shall furnish an information return for the specified periods, within the prescribed time, in the prescribed form and manner and to the prescribed authority or agency.
Section 150(2) deals with defective information returns.
Section 150(3) deals with failure to furnish the information return within the specified time and allows the relevant authority to issue a notice requiring the person to furnish it within a period not exceeding 90 days from the date of service of the notice.
Section 123 becomes relevant when the person still fails to furnish the required information return within the period specified in that notice.
Section 150(3) Notice and Section 123 Penalty
The sequence is important.
Step 1 – Information Return Is Required
A person falls within a category covered by Section 150 and is required to furnish an information return.
Step 2 – Information Return Is Not Furnished
The person does not furnish the information return within the applicable time.
Step 3 – Notice Under Section 150(3)
The prescribed authority may serve a notice requiring the person to furnish the information return.
The notice can require the return to be furnished within a period not exceeding 90 days from the date of service.
Step 4 – Failure Continues
If the person fails to furnish the required information return within the period specified in the notice, Section 123 becomes relevant.
Step 5 – Penalty
The proper officer may direct that the person is liable to pay ₹100 for every day during which the failure continues, subject to the maximum of ₹5,000.
Rate of Penalty Under Section 123
The penalty prescribed by Section 123 is straightforward.
| Particular | Section 123 |
|---|---|
| Penalty per day | ₹100 |
| Maximum penalty | ₹5,000 |
| Nature | Continuing daily penalty |
| Trigger | Failure to furnish information return after Section 150(3) notice |
| Authority | Proper officer |
| Relevant provision | Section 150 |
The statutory maximum means that even if the failure continues for a period long enough to produce a mathematical amount above ₹5,000, the penalty under Section 123 cannot exceed ₹5,000.
Example of Section 123 Penalty
Suppose a person is required to furnish an information return under Section 150.
The return is not furnished within the prescribed time.
A notice is then issued under Section 150(3), giving the person a specified period to furnish the information return.
The person still does not furnish it and the failure continues for:
- 10 days → ₹1,000
- 20 days → ₹2,000
- 30 days → ₹3,000
- 40 days → ₹4,000
- 50 days → ₹5,000
Once the statutory maximum of ₹5,000 is reached, the Section 123 penalty cannot increase beyond ₹5,000.
Example – Delay Beyond the Maximum
Suppose the person continues to fail to furnish the information return for 100 days after the relevant notice period.
At ₹100 per day, the mathematical amount would be:
100 × ₹100 = ₹10,000
However, Section 123 contains a specific maximum.
Therefore, the penalty under Section 123 would be capped at:
₹5,000
The statutory ceiling is important when calculating the maximum exposure under this provision.
Is Section 123 Penalty Automatic?
The wording of Section 123 is important.
It provides that the proper officer may direct that the person shall be liable to pay the specified penalty.
Therefore, the provision is framed as an authority for the proper officer to impose or direct the penalty in the circumstances specified by the section.
The section should not be read as creating a separate automatic charge merely because the original information return was not furnished on time.
The failure must be considered in the context of the Section 150 mechanism, particularly the notice under Section 150(3).
Section 123 Does Not Apply to Every GST Return
Section 123 specifically concerns an information return under Section 150.
It is therefore different from provisions dealing with ordinary GST returns and statements.
For example:
- Section 37 deals with details of outward supplies.
- Section 39 deals with GST returns.
- Section 44 deals with annual return.
- Section 45 deals with final return.
- Section 52 deals with statements relating to tax collected at source.
- Section 150 deals with information returns.
A delay in filing an ordinary GST return does not automatically become a Section 123 matter.
The relevant statutory provision depends on the type of return or information involved.
Difference Between Section 123 and Section 124
Section 124 deals with fine for failure to furnish statistics.
Section 123, in contrast, deals with penalty for failure to furnish an information return.
| Basis | Section 123 | Section 124 |
|---|---|---|
| Subject | Information return | Statistics |
| Connected provision | Section 150 | Section 151 |
| Main failure | Failure to furnish information return | Failure to furnish required information/return for statistics |
| Basic consequence | ₹100 per day | Fine up to ₹10,000 |
| Continuing amount | Subject to ₹5,000 maximum | Further fine up to ₹100 per day, subject to ₹25,000 maximum |
Section 124 also addresses wilfully furnishing or causing to be furnished information or a return known to be false. Section 123 is specifically focused on failure to furnish the information return required under Section 150.
Difference Between Section 123 and Section 125
Section 125 is the general penalty provision.
It applies where a person contravenes a provision of the CGST Act or Rules for which no separate penalty is provided.
Section 123 is different because it specifically provides a penalty for failure to furnish an information return under Section 150.
Therefore, where Section 123 specifically covers the failure, the specific provision should be considered rather than treating the matter as an unspecified contravention under the general penalty provision.
Section 123 and Section 126 – General Disciplines Related to Penalty
Section 126 establishes general principles relating to penalties under the CGST Act.
It addresses matters such as:
- minor breaches;
- procedural requirements;
- easily rectifiable mistakes or omissions;
- proportionality of penalty;
- opportunity of hearing; and
- specification of the nature of the breach and applicable law in the penalty order.
The GST Council’s published material explains that the general penalty framework is intended to distinguish minor breaches and procedural requirements from more serious violations.
Section 123, however, is a specific penalty provision dealing with information-return failure.
Opportunity of Being Heard
Penalty proceedings under GST are subject to the applicable procedural safeguards.
Section 126(3) provides that no penalty shall be imposed on any person without giving him an opportunity of being heard.
Therefore, when considering a penalty under Section 123, the broader penalty framework under Chapter XIX should also be kept in view.
The person should be able to explain the circumstances surrounding the failure and provide any relevant information or documents.
👉 Read More → Section 123 – Penalty for failure to furnish information return
Why Is Section 123 Important?
Section 123 is important because GST administration depends not only on information supplied by taxpayers but also on information maintained by other institutions and authorities.
For example, information concerning:
- property transactions;
- banking transactions;
- electricity consumption;
- vehicle registrations;
- company records;
- securities transactions; and
- other specified records
can assist the tax administration in verifying GST-related information.
Section 150 creates the information-gathering framework, while Section 123 provides a specific penalty where a person required to furnish the information return fails to do so even after the notice mechanism under Section 150(3).
Information Return and GST Compliance
The information-return mechanism is part of the broader GST compliance system.
GST authorities may use information obtained from different sources to identify inconsistencies between reported transactions and other available records.
For example, information relating to transactions or records maintained by another authority may assist the department in verifying whether transactions reported by taxpayers are consistent with available third-party information.
Section 123 supports this system by creating a consequence for a person who is legally required to furnish an information return but fails to do so after receiving the statutory notice.
What Should a Person Do After Receiving a Section 150(3) Notice?
A person receiving a notice under Section 150(3) should first verify:
- Why the information return is required.
- Which provision makes the person liable to furnish it.
- What period the information relates to.
- What information or records are being requested.
- The deadline specified in the notice.
- Whether the information return has already been furnished.
- Whether any information previously furnished contains defects.
- Whether supporting records are available.
- Whether clarification is required from the GST authority.
- Whether professional assistance is necessary.
The most important practical point is to respond within the period specified in the notice.
What If the Information Return Has a Defect?
Section 150(2) separately deals with a situation where the Commissioner or an authorised officer considers the information return to be defective.
The person who furnished the information return may be informed of the defect and given an opportunity to rectify it within 30 days from the date of intimation, or within a further period that may be allowed on application.
If the defect is not rectified within the applicable period, the information return may be treated as not furnished and the provisions of the Act may apply.
This is different from the initial failure to furnish the information return addressed by Section 123.
Section 123 and Defective Information Return
There are therefore two different situations:
Situation 1 – No Information Return Furnished
Section 150(3) provides the notice mechanism, and continued failure after the notice period can lead to Section 123 penalty.
Situation 2 – Information Return Furnished but Defective
Section 150(2) provides a mechanism for intimating the defect and allowing the person to rectify it.
The person should therefore carefully examine whether the issue is non-filing or defective filing, because the statutory treatment is different.
Practical Example – Property-Related Information
Suppose a person or authority falls within a category specified under Section 150 because it maintains records relating to transactions involving property.
The prescribed information return is required to be furnished for a specified period.
If the person does not furnish it, the authority may issue a notice under Section 150(3).
If the person continues to fail to furnish the return within the period specified in that notice, Section 123 may apply.
The penalty is ₹100 per day, subject to the ₹5,000 maximum.
Practical Example – Banking Information
Suppose a specified banking entity is required under Section 150 to furnish an information return containing prescribed information.
If the entity fails to furnish the required information return within the statutory time, the Section 150(3) notice mechanism may be triggered.
If the entity still fails to furnish the return within the period specified in the notice, the proper officer may direct the Section 123 penalty.
The penalty remains subject to the statutory maximum of ₹5,000.
Practical Example – Information Already Furnished
Suppose a person receives a notice under Section 150(3), but the person had already furnished the information return.
In such a situation, the person should retain and produce evidence of filing, including the relevant acknowledgement or other proof.
The person should respond to the notice and explain that the information return has already been furnished.
If the issue concerns a defect rather than complete non-filing, Section 150(2) may be relevant.
Section 123 and Section 128
Section 128 gives the Government the power, on the recommendations of the GST Council, to waive, by notification, in whole or in part, any penalty or late fee referred to in specified provisions of the Act.
Section 123 is one of the provisions referenced in the statutory framework relating to Section 128.
Therefore, while Section 123 establishes the statutory penalty, any applicable waiver or relaxation would have to be examined separately under the relevant notification issued under the CGST Act.
A taxpayer should not assume that a waiver exists unless the applicable notification actually provides for it.
Section 123 and Rule 142
Section 123 is also connected in the statutory framework with Rule 142, which deals generally with notice and order for demand of amounts payable under the CGST Act.
However, the precise procedural route should be determined from the applicable facts, statutory provision and rules in force at the relevant time.
Section 123 itself establishes the substantive penalty rate and ceiling for failure to furnish the information return.
Is the Penalty ₹100 Per Day Forever?
No.
Section 123 contains an express maximum.
The penalty is ₹100 per day for the period during which the failure continues, but the total penalty under Section 123 cannot exceed ₹5,000.
For example:
- 5 days = ₹500
- 15 days = ₹1,500
- 30 days = ₹3,000
- 40 days = ₹4,000
- 50 days = ₹5,000
- 100 days = still subject to the ₹5,000 maximum
This makes the ₹5,000 ceiling an important feature of Section 123.
Is Section 123 a Tax Liability?
No.
The amount under Section 123 is a penalty, not GST on a taxable supply.
It does not represent:
- output tax;
- input tax credit;
- interest on delayed tax payment; or
- tax collected from a recipient.
It is a statutory consequence for failure to furnish the required information return in the circumstances covered by Section 123.
Section 123 vs Late Fee
A penalty under Section 123 should also be distinguished from a late fee.
Late fee provisions generally apply to specified GST returns or statements filed after their prescribed due dates.
Section 123 specifically establishes a penalty for failure to furnish an information return under Section 150 after the notice mechanism described in Section 150(3).
Therefore, the two concepts should not be used interchangeably.
Section 123 vs Interest
Interest compensates for specified delays involving tax payment or other statutory situations.
Section 123 does not calculate an amount based on tax outstanding.
Instead, it prescribes:
₹100 per day of continuing failure, subject to ₹5,000.
Therefore, the Section 123 amount is a penalty rather than interest.
Section 123 vs Section 122
Section 122 contains penalties for specified offences under GST.
Section 123 is narrower.
It specifically concerns failure to furnish an information return under Section 150.
Therefore, a person should identify the exact nature of the alleged non-compliance before determining which penalty provision applies.
Importance of Responding to the Notice
The Section 150(3) notice is particularly important because Section 123 expressly refers to failure to furnish the information return within the period specified in that notice.
A person who receives such a notice should therefore not ignore it.
A proper response may involve:
- furnishing the required information return;
- correcting or completing information;
- providing proof of earlier filing;
- explaining why the person is not covered by Section 150;
- seeking clarification where the notice is unclear; or
- responding with supporting documents.
The appropriate response depends on the facts and contents of the notice.
Compliance Checklist Under Section 123
A person covered by the information-return framework should maintain a compliance system that includes:
1. Identify Whether Section 150 Applies
Determine whether the person falls within one of the categories covered by Section 150.
2. Track the Required Period
Identify the period for which the information return is required.
3. Maintain Relevant Records
Keep the records from which the information return must be prepared.
4. Monitor Filing Deadlines
Ensure that the information return is furnished within the prescribed period.
5. Check for Defects
If an intimation of defect is received, address it within the permitted period.
6. Respond to Section 150(3) Notices
Do not ignore a notice requiring furnishing of an information return.
7. Maintain Filing Evidence
Keep acknowledgement and other evidence demonstrating that the information return was furnished.
8. Review Penalty Exposure
If the failure continues after the notice period, calculate the potential Section 123 penalty subject to the ₹5,000 ceiling.
Key Points of Section 123
Section 123 can be summarised through the following points:
- Section 123 deals with the penalty for failure to furnish an information return.
- It is part of Chapter XIX of the CGST Act dealing with offences and penalties.
- The section is linked specifically to the information-return obligation under Section 150.
- It applies to a person who is required to furnish an information return under Section 150.
- The information return must not have been furnished within the period specified in the Section 150(3) notice.
- The proper officer may direct that the person is liable to pay the penalty.
- The penalty is ₹100 for every day during which the failure continues.
- The total penalty cannot exceed ₹5,000.
- Section 150(3) provides the notice mechanism preceding the Section 123 consequence.
- Section 150(2) separately deals with defective information returns.
- Section 123 is different from Section 124, which concerns failure to furnish statistics.
- Section 123 is different from Section 125, which provides a general penalty.
- Section 123 is also different from late fee and interest provisions.
- The general penalty disciplines under Section 126 are relevant to penalty proceedings.
- A person should respond to a Section 150(3) notice within the specified period.
- The ₹5,000 statutory ceiling remains applicable even if the failure continues for a longer period.
- Section 128 provides a statutory framework under which specified penalties may be waived by notification.
- The information-return framework helps the GST administration obtain relevant information from specified persons and institutions.
Conclusion
Section 123 of the CGST Act provides a specific penalty for a person who is required to furnish an information return under Section 150 but fails to furnish it within the period specified in a notice issued under Section 150(3).
The penalty is ₹100 for every day during which the failure continues, subject to a maximum of ₹5,000. The provision therefore creates a relatively specific and capped consequence for continued failure to comply with the information-return requirement.
Section 123 cannot be properly understood without reading Section 150. Section 150 establishes the obligation for specified persons and entities to furnish information returns and provides the mechanism for dealing with non-filing and defective information. Under Section 150(3), a notice may require the person to furnish the information return within a period not exceeding 90 days from the date of service of the notice. Continued failure after the specified period can bring Section 123 into operation.
The provision should also be distinguished from Section 124, which deals with failure to furnish statistics, Section 125, which contains the general penalty, and Section 47, which deals with late fees for specified GST returns and statements.
For practical compliance, any person or organisation covered by Section 150 should maintain accurate records, monitor information-return requirements and respond promptly to a Section 150(3) notice. If an information return has already been furnished, evidence of filing should be retained and produced where necessary. Where the return is defective, the separate rectification mechanism under Section 150(2) should be examined.
Overall, Section 123 ensures that the information-return mechanism under Section 150 is supported by a specific statutory penalty for continued non-compliance, while keeping the penalty capped at ₹5,000.
Based on Google's Helpful Content System, this article emphasizes user value, transparency, and accuracy. It incorporates principles of E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness).
Why Choose Sarkari Bakery?
Official Information
Government schemes & banking information based on official sources.
Step-by-Step Guides
Simple application process explained for every service.
Regular Updates
Content updated whenever official rules or services change.
People-First Content
Helpful, transparent and user-focused content.