What is the penalty for not issuing a sales tax invoice or issuing an invoice without authority?

A distributor who sells taxable goods without handing over a proper invoice, or a trader who prints invoices showing sales tax without being registered, commits separate offences under the Sales Tax Act, 1990. Both are listed in the Table in section 33, and both penalties were raised by the Finance Act, 2026.

What does the law say?

Section 23(1) requires a registered person making a taxable supply to issue a serially numbered tax invoice at the time of supply, carrying particulars such as the names, addresses and registration numbers of supplier and recipient, the description and quantity of goods, the value exclusive of tax, the sales tax and the value inclusive of tax. The same section adds that “not more than one tax invoice shall be issued for a taxable supply”, and section 23(2) says only a registered person or a person paying retail tax may issue an invoice under the section.

The section 33 Table then attaches penalties:

S. No.	Offence (column 1)	Penalty (column 2)
2	Any person who fails to issue an invoice when required under this Act	Rs. 25,000 or 5% of the amount of the tax involved, whichever is higher
3	Any person who un-authorizedly issues an invoice in which an amount of tax is specified	Rs. 50,000 or 10% of the amount of the tax involved, whichever is higher

The footnotes in the consolidated Act record that the Finance Act, 2026 substituted “twenty-five thousand rupees or five per cent” in serial 2, and the words “fifty” and “ten” in serial 3.

How does it work in practice?

The penalty is the higher of a fixed rupee floor and a percentage of “the amount of the tax involved”. For small invoices the floor decides the amount. For large ones the percentage takes over.

• Serial 2 bites on a registered seller who makes a supply and does not issue the invoice section 23 requires.
• Serial 3 bites on anyone who issues an invoice showing sales tax without the authority to do so, for example a trader who is not registered.

The Act does not define “tax involved” for serial 2. Where the sale was declared and the tax paid despite the missing invoice, the Table does not say whether the tax involved is the tax on that sale or something else. That question is not resolved here.

Worked example (illustrative figures)

The traders, sales and tax amounts below are invented. The floors and percentages are the ones in serials 2 and 3.

Case A: small sale, no invoice. Butt Traders in Gujranwala supplies goods on which the sales tax is Rs. 360,000 and issues no invoice.

1. 5% of Rs. 360,000 = Rs. 18,000.
2. Floor = Rs. 25,000.
3. Higher of the two: Rs. 25,000.

Case B: large sale, no invoice. The sales tax on the supply is Rs. 1,800,000.

1. 5% of Rs. 1,800,000 = Rs. 90,000.
2. Floor = Rs. 25,000.
3. Higher of the two: Rs. 90,000.

Case C: unauthorised invoice. An unregistered wholesaler in Hyderabad issues an invoice showing sales tax of Rs. 700,000.

1. 10% of Rs. 700,000 = Rs. 70,000.
2. Floor = Rs. 50,000.
3. Higher of the two: Rs. 70,000.

If the invoice in Case C had shown tax of Rs. 200,000, 10% would be Rs. 20,000, so the Rs. 50,000 floor would apply instead.

What if the invoice is for a sale that never happened?

That is a different and much heavier offence. Serial 29, added by the Finance Act, 2026, covers a registered person who issues a tax invoice for a transaction that is simulated or fictitious, or for which no actual supply has taken place, as established after notice and adjudication. The penalty is “equal to the face value” of the invoice or invoices. The Board then places the issuer’s name and registration number on a publicly accessible simulated invoice issuers register, and input tax claimed by buyers on those invoices is reversed.

Serial 31 then reaches the buyer: a registered person who claimed input tax on invoices from a listed issuer and does not reverse it within sixty days of the listing pays 20% of the unreversed credit, in addition to the reversal and default surcharge.

Common mistakes

• Quoting the old amounts. Serials 2 and 3 were amended by the Finance Act, 2026. Older summaries carry lower figures.
• Issuing two invoices for one supply. Section 23 says not more than one tax invoice shall be issued for a taxable supply.
• Assuming an unregistered seller can pass on tax on paper. Section 23(2) limits invoicing to registered persons and persons paying retail tax.
• Confusing serial 3 with serial 29. Serial 3 is about who may issue an invoice. Serial 29 is about invoices with no real supply behind them.

What to check in the official text

Read section 23 and serials 2, 3, 29 and 31 of the Table in section 33 of the Sales Tax Act, 1990, as amended to 30 June 2026. The Table is printed as a multi-page grid in the official PDF, so check the wording of each entry against the page itself. Where the Board has notified modified invoices or electronic invoicing for your class of persons, those notifications are not held on this site.