Section 123 of the CGST Act, 2017

What is Section 123 of the CGST Act?

Section 123 creates 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 the notice issued under Section 150(3).

Where the conditions of Section 123 are satisfied, the proper officer may direct a penalty of ₹100 for every day during which the failure continues. However, the total penalty imposed under Section 123 cannot exceed ₹5,000.

This means the provision is relatively simple mathematically, but it is important to understand the procedural chain: Section 150 obligation → prescribed/required information return → Section 150 notice where applicable → failure to furnish within the notice period → Section 123 penalty direction.

Section 123 explained — complete contents

1Current statutory text

Section 123 is short. The complete legal effect can be understood from the following provision:

2What does Section 123 mean in ordinary language?

Imagine that the GST law says a particular institution or person has to provide a structured information return containing information relevant to GST. The person does not provide it within the time required after receiving the statutory notice. Section 123 gives the proper officer power to impose a small continuing penalty for that failure.

3How Section 150 connects to Section 123

To understand Section 123 properly, Section 150 must be read with it. Section 150 is titled “Obligation to furnish information return”. It creates a framework under which specified categories of persons can be required to furnish information relevant to the GST administration.

Who does Section 150 cover?

Section 150(1) contains a list of categories. The statutory list includes, among others:

The exact scope should always be read from the current Section 150 and the particular notice issued. The existence of a category in Section 150 does not mean that every person in that category must continuously send information to GST authorities without a statutory requirement or notice.

4Why the Section 150(3) notice matters

Section 123 refers specifically to the period specified in the notice issued under Section 150(3). This is one of the most important procedural details in the entire section.

What does Section 150(3) do?

Where a person required to furnish an information return has not furnished it within the time specified in the relevant provision, Section 150(3) allows the specified authority to serve a notice requiring the information return to be furnished within a period not exceeding 90 days from the date of service of the notice.

Why the notice should be read carefully

• Check the date on which the notice was actually served.
• Identify the exact information return being requested.
• Check the statutory basis cited in the notice.
• Check the period allowed for furnishing the information return.
• Identify the exact data fields and supporting documents required.
• Confirm the correct person/entity to whom the obligation applies.
• Preserve proof of service and proof of eventual submission.

What if the information return is defective?

Section 150 also contains a separate mechanism for defective information returns. Where the Commissioner or authorised officer considers the information return defective, the defect may be intimated and an opportunity to rectify it is provided. Therefore, a business or institution should distinguish between:

1. failure to furnish an information return;
2. furnishing an information return with a defect; and
3. failure to rectify a defect after being given the statutory opportunity.

These are different procedural situations and should not automatically be treated as identical.

5Who can actually face Section 123?

The answer begins with the words of the section: “a person who is required to furnish an information return under section 150.”

6How is the Section 123 penalty calculated?

The calculation is straightforward:

But the final amount is restricted by the statutory cap:

Is ₹5,000 always payable?

No. ₹5,000 is the maximum, not an automatic fixed penalty. For example, a continuing failure of 12 days corresponds to ₹1,200 under the daily formula, subject to the proper officer's direction and the facts of the case.

Is the penalty automatically imposed?

The wording says the proper officer “may direct” that the person shall be liable to pay the penalty. Therefore, Section 123 should not be described as an automatic computer-generated late fee in the same way as a routine return late fee.

7Section 123 penalty vs GST late fee

One of the most common misunderstandings is to call every GST delay a “late fee.” Section 123 is different from the ordinary late-fee provisions.

For example, Section 47 deals with late fees for specified GST returns/details. That does not mean a missed GSTR-3B or GSTR-1 should be described as a Section 123 penalty. The legal provision actually invoked must be checked. citeturn0search6

8Detailed Section 123 examples

Example 1 — 10 days of continuing failure

A person is legally required to furnish an information return under Section 150. A Section 150(3) notice specifies the period for furnishing it. The person remains in default for 10 days after the applicable deadline.

Calculation: ₹100 × 10 = ₹1,000, subject to the proper officer's direction and the facts of the case.

Example 2 — 35 days of continuing failure

The information return remains unfurnished for 35 days after the applicable notice period.

Calculation: ₹100 × 35 = ₹3,500.

Example 3 — 60 days of continuing failure

The mathematical calculation would be ₹6,000, but the statutory proviso caps the penalty imposed under Section 123 at ₹5,000.

Example 4 — 120 days of continuing failure

The mathematical amount would be ₹12,000. The Section 123 ceiling remains ₹5,000. The penalty under this section cannot be increased merely because the delay continued beyond the point at which the cap was reached.

Example 5 — a normal GST return is delayed

A registered taxpayer files GSTR-3B after its due date. That fact by itself does not make the taxpayer liable under Section 123. GSTR-3B is a GST return, while Section 123 specifically concerns failure to furnish an information return under Section 150.

Example 6 — a department asks for documents

A proper officer sends a notice during an audit asking a company to submit its purchase register, bank statement and invoice copies under a provision dealing with the proceedings. The company delays the response. The finance team should not automatically calculate ₹100 per day under Section 123. It must first identify the statutory provision under which the information has been requested.

Example 7 — information return furnished before the notice deadline

A person receives a Section 150(3) notice and furnishes the required information return within the period specified in that notice. The core failure described by Section 123—failure to furnish within the specified period—does not arise on those facts.

Example 8 — defective information return

A person furnishes an information return, but the authority considers it defective and gives an opportunity to rectify it. The company should examine the defect-intimation procedure under Section 150 rather than treating the case as a simple “never furnished” situation. The statutory consequences depend on what was furnished and what remains unrectified.

Example 9 — partial submission

A person submits only half of the information requested in an information-return process. Whether the return is treated as furnished, defective or not furnished depends on the statutory requirements and the facts. A taxpayer should not assume that uploading an incomplete file automatically closes the obligation.

Example 10 — notice received by a bank or other information holder

Where an institution falls within a Section 150 category and receives a valid statutory requirement, its compliance team should route the notice to the legal/tax reporting owner, identify the data source, validate the information, obtain internal approval and preserve submission evidence.

9Practical compliance process for an organisation

Section 123 is easier to manage when an organisation treats information-return notices as controlled regulatory tasks rather than ordinary emails.

Suggested information-return tracker

10What should you do after receiving a Section 150 notice?

1. Do not ignore it. Put the notice into the statutory compliance tracker immediately.
2. Identify the legal basis. Confirm that the request is actually under Section 150 and, if relevant, Section 150(3).
3. Calculate the deadline correctly. Use the actual service date and the period specified in the notice.
4. Identify the exact information return. Avoid sending unrelated documents while missing the information specifically required.
5. Validate the data. Information supplied to a government authority should be internally reconciled and supported.
6. Prepare an index. If supporting files are requested, map each file to the relevant item in the notice.
7. Submit through the prescribed channel. Keep the acknowledgement/reference number.
8. Check for defect communication. If the authority identifies a defect, address it within the period provided under the applicable provision.
9. Escalate complex issues. If the request involves sensitive third-party data, disputed facts or significant regulatory exposure, involve the appropriate legal/tax team.

11Documents and records to retain

For large organisations, the final submitted dataset should be retained in an immutable or controlled location so that the organisation can later demonstrate exactly what information was furnished.

12Common misunderstandings about Section 123

Misunderstanding 1 — “₹100 per day applies to every GST delay.”

Incorrect. Section 123 is specifically about failure to furnish an information return under Section 150 in the circumstances stated by the section.

Misunderstanding 2 — “The penalty is always ₹5,000.”

Incorrect. ₹5,000 is the statutory maximum. The basic calculation is ₹100 per day of continuing failure, subject to the cap.

Misunderstanding 3 — “The penalty starts from the original date of the information obligation in every case.”

Not necessarily. Section 123 specifically refers to failure within the period specified in the notice issued under Section 150(3). The notice and the statutory timeline must therefore be examined.

Misunderstanding 4 — “Any GST notice means Section 123.”

Incorrect. GST has many different information, audit, inspection, summons and return provisions. Identify the actual statutory section.

Misunderstanding 5 — “If an information return is defective, it is automatically the same as never filing it.”

Not automatically. Section 150 contains a specific defect-intimation and rectification mechanism. The exact facts and procedural stage matter.

Misunderstanding 6 — “Section 123 is the same as Section 124.”

No. Section 123 concerns failure to furnish an information return under Section 150. Section 124 concerns failure or wilful furnishing of false information/return under Section 151, which is the separate power to collect statistics.

13Related GST provisions

14Questions people commonly search on Google

15Frequently asked questions on Section 123

16Section 123 in one minute

How to use this page

This page is prepared for public education, GST compliance awareness and practical workflow support. It is not a substitute for the CGST Act, CGST Rules, notifications, circulars, departmental instructions or judicial decisions applicable to a specific person, transaction or tax period.

For an actual information-return notice or penalty proceeding, verify the current law applicable to the relevant date, the exact wording of the notice, the service date, the information requested and the applicable procedural provisions. Professional advice may be appropriate for disputed or high-impact matters.