Under the Goods and Services Tax (GST) regime in India, issuing an incorrect or non-compliant invoice can attract various penalties. The specific penalty depends on the nature of the error or non-compliance. Here’s a breakdown of the potential penalties for issuing such invoices: 1. Penalty for Incorrect or Missing Details: Section 122(1)(iii) of the CGST Act imposes a penalty for issuing an incorrect or non-compliant invoice. Penalty: The penalty can be ₹10,000 or the amount of tax due, whichever is higher. This penalty applies if a taxpayer issues an invoice that does not comply with the provisions of the GST Act, such as missing required details (like GSTIN, HSN code, or incorrect amount of tax charged). 2. Penalty for Failure to Issue Invoice: Section 122(1)(vii) provides for a penalty if a taxpayer fails to issue an invoice when required. Penalty: The penalty is ₹10,000 or the amount of tax due, whichever is higher. 3. Penalty for Issuing an Invoice Without Supply (Fake Invoices): If an invoice is issued without any actual supply of goods or services (e.g., for fraudulent reasons or to claim input tax credit fraudulently), it is considered a serious offense under GST. Penalty: The penalty can be as high as 100% of the tax due and could include imprisonment, depending on the severity of the fraud. This could also attract penalties under the provisions of the Indian Penal Code (IPC) for fraud. 4. Penalty for Issuing an Invoice with Incorrect HSN/SAC Code: If the incorrect HSN/SAC code is mentioned on the invoice, the tax authorities may impose penalties under Section 122 for non-compliance. Penalty: A penalty of ₹10,000 or the amount of tax due, whichever is higher, can be imposed. 5. Penalty for Non-Compliance with GST Invoice Format: If the format of the invoice does not comply with the rules specified under GST Invoice Rules, a penalty can be levied. Penalty: The penalty could be ₹10,000 or the tax amount involved, whichever is higher. 6. Consequences of Non-Compliance with E-Invoicing Requirements: For businesses that meet the turnover threshold for mandatory e-invoicing, failure to comply with e-invoicing requirements can attract penalties. Penalty: Penalties for failure to comply with e-invoicing provisions are similar to the penalties for non-compliance with regular invoicing, i.e., ₹10,000 or the tax due, whichever is higher. Additional Considerations: Interest on Late Payment: If GST on an incorrect invoice is not paid on time, interest will also be charged on the tax amount due. Correction of Errors: Taxpayers can correct minor errors on invoices without facing penalties, but they must ensure that the corrections are made before filing returns. For significant errors, the penalty provisions apply. In summary, the penalty for issuing an incorrect or non-compliant invoice under GST can be a fine of ₹10,000 or the amount of tax due, with more serious consequences for fraudulent or intentional errors.

Under the GST law in India, issuing an incorrect or non-compliant invoice can lead to significant penalties, as specified in Section 122 of the CGST Act. The penalty for such an act may extend up to ₹25,000. Furthermore, if the non-compliance results in tax evasion or reduces tax liability, additional penalties under the anti-evasion provisions may be applied. The Hon'ble Gujarat High Court in the case of M/s Kay Pan Fragrance Pvt. Ltd. v. State of Gujarat (2020) observed that proper documentation, including correct invoicing, is a critical aspect of ensuring compliance under the GST regime. The court emphasized that discrepancies in invoices could lead to revenue leakage and may attract penalties, even in cases where the intention to evade tax is not established. Additionally, the GST framework provides businesses with an opportunity to rectify errors in their invoices before any penalty is imposed. This aligns with the principle of natural justice, which aims to provide taxpayers a fair chance to correct unintentional mistakes. Taxpayers are, therefore, advised to exercise due diligence in invoice preparation to avoid penalties and legal complications.