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Section 137 of the CGST Act, 2017

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GST›CGST Act, 2017›Chapter XIX, Offences and Penalties

At a glance

Entitlement and conditions

137(1)The general company rule deems the company and persons in charge of and responsible for its business at the offence time guilty and subject to proceedings and punishment.
137(2)Notwithstanding that rule, proven consent, connivance or attributable negligence also reaches a director, manager, secretary or other officer.
137(3)For a taxable partnership, Limited Liability Partnership, Hindu Undivided Family or trust, the partner, karta or managing trustee is deemed guilty, with the officer rule applying with necessary changes.
137(4)A person who proves absence of knowledge or all due diligence to prevent the offence is protected from punishment under this section.

Procedure, powers and definitions

137 ExplanationCompany means a body corporate and includes a firm or other association of individuals; director in relation to a firm means a partner.
137The law does not settle who proves officer involvement, before which forum or to what standard; whether the defence protects entities too; or how the entity definitions and separate firm rule overlap.

Company offences can expose those responsible for business conduct and officers whose consent, connivance or negligence is proved. The latter rule applies notwithstanding the general responsibility rule. Partners, a karta and a managing trustee are separately addressed. A person can avoid punishment by proving lack of knowledge or all due diligence to prevent the offence; the defence’s reach remains unsettled.^[1]

Quick facts

Section 137, CGST Act, 2017

Offences by companies

Provision
Act	Central Goods and Services Tax Act, 2017
Chapter	XIX, Offences and Penalties
Section title	Offences by companies
Amendments
Last amendment	1 July 2017: Enforced the section (—)
Amendments	1 footnote in the CBIC text (table)
Related provisions
Sections	2, 132, 135, 138
Structure 137(1)The person in charge of the business, and the company, under sub-section (1) 137(2)The officer reached through consent, connivance or neglect under sub-section (2) 137(3)The partner, karta or managing trustee under sub-section (3) 137(4)The defence under sub-section (4) Explanation clauses (i) and (ii)The meanings the Explanation gives
Source
Law text	CBIC tax information portal, served on 17 September 2026^[1]
Questions reviewed	Prashant Prakash, 22 September 2026

Text

The text below is the section as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.^[1] The Act as published in the Gazette of India is the legal source.

Section 137, verbatim (show)

*Section 137. Offences by companies.-

(1) Where an offence committed by a person under this Act is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

(3) Where an offence under this Act has been committed by a taxable person being a partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust, the partner or karta or managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section (2) shall, mutatis mutandis , apply to such persons.

(4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

Explanation.-For the purposes of this section,-

(i) "company" means a body corporate and includes a firm or other association of individuals; and

(ii) "director" , in relation to a firm, means a partner in the firm.

* Enforced w.e.f . 1st July, 2017.

Questions to answer on the file

Questions a reviewer answers from the engagement file, grouped by the part of the section they come from. They describe what the section asks; they do not decide it.

Scope the section as a whole

Questions to answer on the file5 questions

Which limb of section 137 is the matter about?
Does a complaint or a sanction order on the file state that an offence under this Act has been committed by the entity?
What kind of person is the entity by which the offence is said to have been committed: a company, a partnership firm, a Limited Liability Partnership, a Hindu Undivided Family, a trust or none of these?
On what date was the act or omission said to be the offence done?
Was the act or omission done on or after 1 July 2017?

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The person in charge of the business, and the company, under sub-section (1) 137(1)

Questions to answer on the file3 questions

Which of the two persons sub-section (1) speaks of is the person: the company, a person said to have been in charge of, and responsible to, the company or neither of these?
Was the person in charge of the company for the conduct of the business of the company at the time the offence was committed?
Was the person responsible to the company for the conduct of the business of the company at the time the offence was committed?

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The officer reached through consent, connivance or neglect under sub-section (2) 137(2)

Questions to answer on the file6 questions

Is the person said to be reached through sub-section (2) as sub-section (3) applies it to such persons?
Which office does the person hold in the company: a director, a manager, a secretary, an other officer of the company or none of these?
Was the offence committed with the consent of the person?
Was the offence committed with the connivance of the person?
Is the offence attributable to any negligence on the part of the person?
Is the requirement of sub-section (2) that the matter be proved met for the person?

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The partner, karta or managing trustee under sub-section (3) 137(3)

Questions to answer on the file2 questions

Is the entity by which the offence is said to have been committed a taxable person?
Which of the three persons sub-section (3) names is the person: the partner, the karta, the managing trustee or none of these?

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The defence under sub-section (4) 137(4)

Questions to answer on the file3 questions

Is the person one of the persons sub-section (4) speaks of as any such person?
Has the person proved that the offence was committed without his knowledge?
Has the person proved that he had exercised all due diligence to prevent the commission of the offence?

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The meanings the Explanation gives Explanation clauses (i) and (ii)

Questions to answer on the file4 questions

Is the entity by which the offence is said to have been committed a body corporate?
Is the entity by which the offence is said to have been committed a firm or other association of individuals?
Is the person a partner in the firm by which the offence is said to have been committed?
Does the meaning the Explanation gives to company reach the entity by which the offence is said to have been committed?

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Amendment history

The CBIC text carries 1 footnote. The table gives each in the source's own terms. Effective dates are as the footnotes state them.^[1]

Amendments to section 137 as footnoted in the CBIC text
Note	Change	Instrument	Effective from
	Enforced the section	—	1st July, 2017

Provisions connected to Section 137
Provision	Connection	Words that tie them
Section 132	137(1) requires Section 132	137(1) "Where an offence committed by a person under this Act is a company"; the offences under this Act that a court is asked to punish are those section 132 states
Section 2	137(3) defined by Section 2 clause (107)	137(3) "committed by a taxable person being a partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust"
Section 135	137(2) requires Section 135	137(2) "the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of"; section 135 is the presumption of culpable mental state and is not compiled
Section 138	137 clarified by Section 138	137(1) "shall be liable to be proceeded against and punished accordingly"; section 138 allows an offence under this Act to be compounded either before or after the institution of prosecution

Circulars and notifications

Circulars and notifications in the CBIC repository that cite this section, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.

Notifications (1)

Number	Date	Subject
Notification No. 28/2023-Central Tax	31 July 2023	Seeks to notify the provisions of sections 137 to 162 of the Finance Act, 2023 (8 of 2023).

Unsettled questions

The words of section 137 do not answer these questions. Where one decides a matter on the file, the answer depends on the position taken on it.

Sub-section (2) reaches the officer only where "it is proved" that the offence was committed with his consent or connivance or is attributable to his negligence. It names no person who must prove it, no forum before which it is proved and no standard of proof, and the section carries no other words on proof. What, then, does an engagement file have to hold before the limb can be treated as satisfied, and can it be satisfied anywhere but in the criminal proceeding itself?
Sub-section (4) protects "any such person" who proves the two things it names. Does that reach only the individuals sub-sections (1), (2) and (3) deem guilty, or also the company, firm or other entity that committed the offence and which sub-section (1) deems guilty "as well as the company"? The sub-section names no person and the section defines the expression nowhere.
Explanation (i) makes "company" mean a body corporate and include a firm or other association of individuals, while sub-section (3) provides separately for a partnership firm, and neither says which sub-section governs a firm. The Explanation says nothing at all about a Limited Liability Partnership, a Hindu Undivided Family or a trust, and Explanation (ii) turns a partner into a "director" only "in relation to a firm". Which entities does the Explanation reach, and does a firm fall under sub-sections (1) and (2), under sub-section (3), or under both?

See also

Section 132 of the CGST Act, 2017: punishment for certain offences
Section 135 of the CGST Act, 2017: presumption of culpable mental state

References

Central Board of Indirect Taxes and Customs. "Section 137. Offences by companies". Central Goods and Services Tax Act, 2017, CBIC tax information portal, with amendment footnotes 1 to 1. Retrieved 17 September 2026.

External links

CGST Act, 2017, Section 137 on the CBIC tax information portal