Chapter XIX - Offences and penalties
Section 137
Section 137: Offences by companies
Where a company commits a GST offence, responsible persons and those involved through consent, connivance or negligence can also face prosecution, subject to a statutory defence.
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Need advice on Section 137?
This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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.
Key takeaways
Persons in charge
Those in charge of and responsible for the company’s business at the time of the offence may be deemed guilty alongside the company.
Consent or negligence
Directors, managers, secretaries or other officers may be liable where the offence involved their consent, connivance or negligence.
Knowledge and diligence defence
A person avoids punishment under this section by proving lack of knowledge or all due diligence to prevent the offence.
Persons in charge
Those in charge of and responsible for the company’s business at the time of the offence may be deemed guilty alongside the company.
Consent or negligence
Directors, managers, secretaries or other officers may be liable where the offence involved their consent, connivance or negligence.
Knowledge and diligence defence
A person avoids punishment under this section by proving lack of knowledge or all due diligence to prevent the offence.
Practical checklist
Do
- Identify responsibility at the offence date.
- Preserve delegation, controls and due-diligence records.
- Separate corporate liability from each individual’s basis and defence.
Frequently asked questions
Is every director automatically punished for every company offence?
Section 137 sets responsibility and consent/connivance/negligence tests and permits a knowledge or due-diligence defence.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026