GST
Reduced penalty options in a Sec 74 case
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Facts
Sec 74 gives three windows: pay tax, interest and 15 percent penalty before the notice; pay tax, interest and 25 percent penalty within 30 days of the notice; or pay tax, interest and 50 percent penalty within 30 days of the order. Otherwise penalty equals the tax.
Provisions and law
- Sec 74, CGST Act 2017Demand where fraud, wilful misstatement or suppression is alleged, for periods up to FY 2023-24
- Rule 142(3), CGST Rules 2017DRC-05 intimation that proceedings are concluded after full payment
Analysis
On tax of ₹10,00,000, penalty is ₹2,50,000 if paid within 30 days of the notice, against ₹10,00,000 if you lose after a full fight. If your defence is strong, contest. If records are weak, the early payment option may be the cheaper path.
Conclusion
- Assess the strength of your defence
- Compute cost at each window
- Pay through DRC-03 linked to the notice if you choose to settle
- Track DRC-05 for closure
A Savvy can do this for you
Show cause notice under Sec 73, 74 or 74A and DRC-06 reply
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