Answer

1. F

   Facts

   In fraud or suppression cases, paying before a notice still needs a penalty: 15 percent of the tax. For later stages the penalty is higher.

2. P

   Provisions and law

   • Sec 74(5), CGST Act 2017In fraud or suppression cases up to FY 2023-24, pay tax, interest and 15 percent penalty before notice
   • Sec 74A(9), CGST Act 2017From FY 2024-25, fraud cases: 15 percent penalty before notice, 25 percent within 60 days of notice, 50 percent within 60 days of order
   • Rule 142(2) and (3), CGST Rules 2017Payment before or after a notice is intimated in DRC-03; the officer acknowledges it in DRC-04
3. A

   Analysis

   Sec 74(5) for periods up to FY 2023-24 and Sec 74A(9) from FY 2024-25 set 15 percent before notice and 25 percent within the time after a notice. Example: ₹2 lakh tax in a suppression case; paying before notice means ₹2 lakh tax, interest and ₹30,000 penalty. Take legal advice on whether the case is truly fraud before choosing the section.

4. C

   Conclusion

   1. 1Take advice on whether the facts are fraud or non-fraud.
   2. 2Calculate tax, interest and the penalty that applies.
   3. 3File DRC-03 under the right section.
   4. 4Pay interest and penalty in cash.
   5. 5Keep records of the payment.

Choosing the fraud section yourself can be treated as an admission, so decide with advice.

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