Penalty U/s 74, Goods and Services Tax - GST

[Komal Agarwal]

Dear Sir,

GST department had issued an Intimation Notice U/s 74 in form DRC01A to my client for reversal of ITC of Rs 2,10,000/- plus applicable interest and penalty @15% of tax on 12/07/2024. Client deposited tax amount of Rs 2,10,000/- via DRC03 on 16/07/2024. He did not deposited interest and applicable penalty.

As on 27/07/2024 the department issued Show Cause Notice U/s 74 for payment of interest and Penalty as per section 74 of CGST Act. Client did not respond the SCN.

Finally the demand order was issued on 01/02/2025 for payment of applicable interest and 100% Penalty.

The provision of Section 74 provide the penalty @15% if payment made before issue of SCN, 25% if payment made within 30 days of SCN, 50% if payment made thereafter, 100% in other case.

In this case client had already paid tax before issue of SCN. Please tell me the applicable penalty rate to the client.

Thanks

Posts / Replies

[Sadanand Bulbule]

Dear 

Plz peruse Section 74(5) as under:

(5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax 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.

Hope it would answer your query.

[KASTURI SETHI]

Now in order to be eligible for  the benefit of reduced penalty and for deemed conclusion of proceedings  the Noticee  will have to pay interest and 50 %  penalty also   within stipulated period as per  Section 74 (11) failing which  100 %  penalty will have to be paid as per Adjudication Order.

I also concur with the views of Sh.Sadanand Bulbule, Sir.