J & Co. self-assessed its tax liability as ₹ 80,000 for the month of April, 2022 but failed to make the payment. Subsequently the Department initiated penal proceedings against J & Co. for recovery of penalty und

Due date for payment of tax for the month of April is 20th May. As per section 73(11) of the Central Goods and Services Tax (CGST) Act 2017, where self-assessed tax is not paid within 30 days from due date of payment of such tax, penalty equivalent to 10% of tax or ₹ 10,000, whichever is higher, is payable. Thus, option to pay tax within 30 days of issuance of Show Cause Notice (SCN) to avoid penalty, is not available in case of self-assessed tax. Since in the given case, J & Co. has not paid the self-assessed tax within 30 days of due date (i.e. 20th May). Penalty equivalent to: 10% of tax, viz., ₹ 8,000 (10% of ₹ 80,000) or ₹ 10,000, Whichever is higher, is payable by him. Thus, penalty payable is ₹ 10,000. Hence, the stand taken by the Department that penalty will be levied on J & Co. is correct, but the amount of penalty of ₹ 40,000 as sought to be imposed on J & Co., is not correct.