GST
Reduced penalty by paying soon after the order
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Facts
For Sec 74 cases up to FY 2023-24, paying tax and interest with 50 percent penalty within 30 days of the order concludes the matter. For Sec 74A cases from FY 2024-25, paying tax, interest and 50 percent penalty within 60 days of the order does the same.
Provisions and law
- Sec 74, CGST Act 2017Demand where fraud, wilful misstatement or suppression is alleged, for periods up to FY 2023-24
- Sec 74A, CGST Act 2017Single demand provision for FY 2024-25 onwards, fraud and non-fraud cases
Analysis
On a Sec 74 order with tax of ₹10,00,000 and penalty of ₹10,00,000, paying within 30 days cuts the penalty to ₹5,00,000. This is worth considering if the merits are weak. But paying means you give up the appeal on those points, so compare the costs.
Conclusion
- Check which section the order is under
- Compute tax, interest and 50 percent penalty
- Pay within the window through the liability register
- Check for DRC-05 closing the proceedings
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Demand order summary
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