Accounting treatment for penalty paid under sec 129 (3)

This query is : Resolved

janak kumar singhal (Querist)
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22 June 2021 Sir,
I want to state that my client has sold goods without invoice and goods was intercepted during transit. A.O. imposed penalty as 100 % of due tax and 100 % equal to tax as penalty under sec 129(3).
Now, i want to know, whether i can issue taxable sales invoice after releasing goods from officer and pass on credit to the buyer or not?
Whether buyer is eligible to take ITC of such goods?

If i can not issue taxable sales invoice, then what accounting entry we can pass for such type of sale?

CA Altamush Zafar

CA Altamush Zafar (Expert)
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22 June 2021 Yes you will have to raise invoice and the buyer will be eligible for credit subject to section 17

janak kumar singhal

janak kumar singhal (Querist)
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23 June 2021 Thansk Sir,
Further, i want to ask, what is accounting entry for penalty paid (4000/- as CGST and SGST Tax and 40000/- as penalty) under sec 129(3).
The sale of goods is related to other state, then i have to issue a new sales bill with IGST tax to the consumer, and pass on IGST credit to the consumer.

CA Altamush Zafar

CA Altamush Zafar (Expert)
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23 June 2021 Penalty will have to be expensed and paid by bank

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