Sahara & Co. (registered in Jaipur) self-assessed its CGST liability as ₹80,000 for the month of April, but failed to make the payment. Subsequently the Department initiated penal proceedings against Sahara & Co.

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · PYQS · June 2025
Sahara & Co. (registered in Jaipur) self-assessed its CGST liability as ₹80,000 for the month of April, but failed to make the payment. Subsequently the Department initiated penal proceedings against Sahara & Co. for recovery of penalty under section 73 for failure to pay GST and issued show cause notice on 10th July, which was received by Sahara & Co. on 14th July. Sahara & Co. deposited the tax along with interest on 25th July and informed the department on the same day. Department is contending that he is liable to pay a penalty of ₹40,000 (i.e., 50% of ₹80,000) under the CGST Act. Explain the provisions related to SCN as per section 73 of CGST Act, 2017. Examine the correctness of the stand taken by the Department with reference to the provisions of the CGST Act.

Answer & Explanation:

Answer 4(b) Due date for payment of tax for the month of April is 20th May. As per section 73(9), the option to pay the tax liability along with interest within 30 days from the date of SCN and avoid penalty is not available where self-assessed tax is not paid Since in the given case, Sahara & Co. has not paid the self-assessed tax within 30 days of due date [i.e., 20th May], penalty equivalent to: (i) 10% of tax, viz., ₹8,000 (10% of ₹80,000) or (ii) ₹10,000, whichever is higher, is payable by him under CGST Act. Equivalent amount of penalty is payable under SGST/UTGST Act. Hence, the stand taken by the Department that penalty will be levied on Sahara & Co. is correct, but the amount of penalty of ₹40,000 under CGST Act is not correct.

Topics: Goods and Services Tax (GST)

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