Answer

1. F

   Facts

   Under Sec 74 (periods up to FY 2023-24), paying tax, interest and a penalty of 15 percent of tax before the notice closes the matter under Sec 74(5).

2. P

   Provisions and law

   • Sec 74(1), CGST Act 2017Show cause notice where tax is short paid or ITC wrongly availed by fraud, wilful misstatement or suppression, for periods up to FY 2023-24.
   • Sec 74(5), CGST Act 2017Under Sec 74, paying tax, interest and a penalty of 15 percent of tax before the notice closes the matter.
3. A

   Analysis

   On tax of ₹5 lakh, paying now means ₹5 lakh plus interest plus ₹75,000 penalty. After the notice the penalty rises. But if there was no fraud, you can argue the case belongs under Sec 73, where pre-notice payment carries no penalty and the time limit is shorter. Decide based on facts and evidence.

4. C

   Conclusion

   1. 1Check what facts the officer uses to allege fraud.
   2. 2Compute the cost of paying now with 15 percent penalty.
   3. 3If no fraud, reply arguing Sec 73 applies.
   4. 4Pay through DRC-03 only after deciding.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.