EXAMPLE

 

The Assistant Commissioner issued a show cause notice on 1.4.2017 on the taxable persons demanding:

Tax not levied= 30,000

Interest u/s 50

Penalty =100% of tax or if paid within 30 days then 10% of tax or 10,000 (whichever is more)

Representations were made by the taxable persons & the proper officer re-calculated the tax liability as follows:

Tax = 20,000

What shall be the penalty of the taxable person if it is a case of misfeasance of facts & the taxable person has made the payment in the following manner:

(i) tax = 20,000, interest thereon on 25.4.2017

(ii) tax = 12,000, interest thereon on 25.4.2017

(iii) tax = 20,000, interest = nil on 27.4.2017

(iv) tax = nil

 

ANSWER

As it is a case of misfeasance of facts, therefore, section 74 is applicable accordingly.

 

As per section 74(8),(9) of the CGST act, where an taxable person, after making representation, does not pays the amount of tax & interest in full within 30 days of issue of SCN, then proper officer shall after giving an opportunity of being heard to the taxable person, issue an order demanding penalty= 50% tax to be paid within 30 days of issuance of order.

 

 (i) The taxable person has discharged full amount of tax & interest thereon u/s 50. The taxable person shall pay penalty @ 25% of tax i.e., 25% (20,000) = 5,000.

Since all the dues were paid within 30 days of issuing of order, the proceeding will be deemed to be concluded.

 

(ii) the taxable person has paid tax = 12000 along with interest. He shall penalty @ 25 % on 12,000 i.e., Rs. 3,000.

 

Further, the taxable person has short paid tax by 8,000 along with interest thereon. The proper officer shall after giving an opportunity of being heard to the taxable person, issue an order confirming demand as under :

Tax = 8,000

Interest u/s 50

Penalty = 50% of (8,000), to be paid within 30 days of order

            = 4,000.

 

Thus, total penalty payable= 3,000 (25% of 12,000)+ 4,000

            = 7,000

 

(iii) the taxable person has paid full payment of tax but not interest. The proper officer shall after giving an opportunity of being heard to the taxable person, issue an order demanding:

Interest on 20,000 payable u/s 50

Penalty=50% of (20,000) , to be paid within 30 days of order

           = 10,000

 

(iv) the taxable person has made representation but has not paid any amount due. The proper officer shall after giving an opportunity of being heard to the taxable person, issue an order demanding:

    Tax=20,000

Interest on 20,000 payable u/s 50

Penalty =50% of (20,000), to be paid within 30 days of order

             = 10,000