EXAMPLE

Taxable person was unable to determine the rate of tax for the goods valuing 10 lac for the month of July and therefore paid tax @ 5% on the basis of provisional assessment by executing bond equivalent to twice the amount of tax & security equivalent to 25% of bond. The proper officer passed the assessment order on 10th September determing rate @ 28%. Determine the amount payable by the aseessee if :

(i) A is ready to make payment on 14th September.

(ii) B pays tax = 150,000, interest = 2836

(iii) C pays tax = 230,000, interest= 2836


ANSWER

As per section 60 of the CGST Act, in the above question, the payment of tax on provisional basis may be allowed, if the taxable person executes a bond in such form as may be prescribed, and with such surety or security as the proper officer may deem fit, binding the taxable person for payment of the difference between the amount of tax as may be finally assessed and the amount of tax provisionally assessed.

tax (provisionally assessed) = 5% of 10 lacs = 50,000

 

bond = 2 ( 50,000 each) = 1 lacs

security= 25% of bond = 25% of 1 lac = 25,000

total bond and security = 125,000

 

(i) bond & security = 125,000 shall be used to discharge the tax & interest due and the following balance shall be paid by A on 14th September:

Tax= 105,000

Interest= 2836

Total = 107,836

 

 (ii) tax paid = 150,000

Interest paid =2,836

Balance due = 80,000 which shall be discharged from the bond and security. B shall apply for release of bond and security worth Rs  45,000.

 

(iii) tax paid = 230,000

Interest= 2836

Since the full amount is discharged, C shall apply for release of bond & security = 125,000