Penalty 73(11)

Section 73(11) of the CGST Act is a specific provision that mandates a penalty when a taxpayer fails to pay self-assessed tax or tax collected from others to the government within 30 days of the due date.

Key Aspects of Section 73(11)

• Mandatory Nature: The section begins with the phrase "Notwithstanding anything contained in sub-section (6) or sub-section (8)." This means that even if you pay the tax and interest later, you cannot avoid this penalty. You do not get the benefit of "waiver of penalty" that might otherwise be available if you pay tax and interest within 30 days of receiving a show-cause notice.

• Scope: It specifically covers two scenarios:

  1. Self-assessed tax: Tax that you calculated yourself (e.g., in your GSTR-3B) but failed to deposit.

  2. Tax collected as tax: Amounts you collected from your customers as GST but failed to remit to the government.

• Penalty Amount: The penalty is the same as described in section 73(9), which is 10% of the tax due or ₹10,000, whichever is higher.

Example

Suppose your GST liability for the month of June is ₹1,00,000. The due date for filing your GSTR-3B and paying this tax is July 20.

• Scenario: You file your GSTR-3B on time but fail to deposit the ₹1,00,000 tax into the government treasury by July 20.

• Trigger: If you continue to delay this payment beyond August 19 (30 days from the original due date of July 20), Section 73(11) is triggered.

• Consequence: Even if you eventually pay the tax and interest voluntarily or after receiving a notice, you will be liable to pay a mandatory penalty of ₹10,000 (since 10% of ₹1,00,000 is ₹10,000, and it is not lower than the minimum penalty).

Important Clarification

It is important to note that the government has clarified (via Circular No. 76/50/2018-GST) that this penalty is not applicable to the simple delayed filing of GSTR-3B where the tax and interest are eventually paid. It is specifically intended for instances where the tax collected or self-assessed is withheld beyond the 30-day grace period.

Summary: Section 73(11) imposes a mandatory penalty of 10% of the tax due (or ₹10,000, whichever is higher) if you fail to pay self-assessed tax or collected tax to the government within 30 days of the legal due date. Unlike other sections, this penalty cannot be waived even by paying the tax and interest later.

Understanding Section 73(11) Penalty

This video provides a detailed breakdown of the mandatory nature and application of Section 73(11) penalty for GST practitioners.