Section 138 of GST Act: Compounding of offences

Amended and updated notes on section 138 of CGST Act, 2017. Detail discussion on provisions and rules related to compounding of offences.

Amended and updated notes on section 138 of CGST Act, 2017. Detail discussion on provisions and rules related to compounding of offences.

Chapter XIX (Sections 122138) of the Central Goods and Services Tax Act, 2017 deals with the provisions related to offences and penalties. Section 138 of CGST 2017 provides for compounding of offences.

Recently, we have discussed in detail section 137 (Offences by companies) of CGST Act 2017. Today, we learn the provisions of section 138 of Central GST Act 2017.

Section 138 of the Central Goods and Services Tax Act, 2017 has been notified by the Ministry of Finance vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017. This notification was come into force from 1st July, 2017 i.e. the commencement date of section 138 is 1-7-2017.

Name of ActThe Central Goods and Services Tax Act 2017
Enacted byParliament of India
Administered byCentral Board of Indirect Taxes & Customs
Governing bodyGST Council
Number of Chapters21
Number of Sections174
You are reading:
Chapter No.XIX
Chapter NameOffences and Penalties
Section No.138
Section NameCompounding of offences
Updated 2024 EditionGST Law Book PDF

Relevant Rules and Forms for GST Section 138:

  • Rule 162: Procedure for compounding of offences
    • FORM GST CPD – 01: Application for Compounding of Offence 
    • FORM GST CPD – 02: Order for rejection / allowance of compounding of offence

Section 138 of Central GST – Compounding of offences1

Section 138 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017.

Section 138(1) of CGST Act

Section 138(1): Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case be, of such compounding amount in such manner as may be prescribed:

Provided that nothing contained in this section shall apply to—

  • (a) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f) of sub-section (1) of section 132 and the offences specified in clause (l) which are relatable to offences specified in clauses (a) to (f) of the said sub-section;
  • (b) a person who has been allowed to compound once in respect of any offence, other than those in clause (a), under this Act or under the provisions of any State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act or the Integrated Goods and Services Tax Act in respect of supplies of value exceeding one crore rupees;
  • (c) a person who has been accused of committing an offence under this Act which is also an offence under any other law for the time being in force;
  • (d) a person who has been convicted for an offence under this Act by a court;
  • (e) a person who has been accused of committing an offence specified in clause (g) or clause (j) or clause (k) of sub-section (1) of section 132; and
  • (f) any other class of persons or offences as may be prescribed:

Provided further that any compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other law:

Provided also that compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences.

Section 138(2) of CGST Act

Section 138(2): The amount for compounding of offences under this section shall be such as may be prescribed, subject to the minimum amount not being less than ten thousand rupees or fifty per cent. of the tax involved, whichever is higher, and the maximum amount not being less than thirty thousand rupees or one hundred and fifty per cent. of the tax, whichever is higher.

Section 138(3) of CGST Act

Section 138(3): On payment of such compounding amount as may be determined by the Commissioner, no further proceedings shall be initiated under this Act against the accused person in respect of the same offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated.

  1. Section 138 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017. ↩︎


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