XYZ Ltd failed to discharge its GST on due date but paid both tax and interest for delayed payment before issue of show cause notice. Subsequently, department initiated penal proceedings against ABC Ltd for recovery of penalty under GST.

Discuss whether a penal proceeding initiated by the department is justified.


No, proceedings initiated by department are not justified.

As per section 73(6) no penalty under any of the provisions of such Act and rules made there-under will be imposed in respect of payment of tax and interest thereon.When the person chargeable with tax may, before service of notice pay the amount of tax along with interest payable thereon on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.