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Tax payment on summon

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CA NAMRATA KAYARWAR

186 Points Posted on 08 June 2023

Summon issued regarding ITC claimed on fake invoices. Theteafter ITC reversed by taxpayers voluntarily through DRC03 without issue of SCN. The interest and penalty was not paid in DRC 03 quoting clause 2 of instruction no 1/2022-23 dated 25/05/2023. Now department issued notice asking for pymt of intt n penalty.

Whether penalty will be imposed in case of voluntary reversal of ITC w/o issue of SCN?

Replies (3)

Quick Summary

This discussion addresses a situation where a GST summon was issued concerning ITC claimed on fake invoices. The taxpayer voluntarily reversed the ITC via DRC-03 before a show cause notice was issued, but did not pay the associated interest and penalty, citing an instruction. The department has now issued a notice demanding payment. The core question is whether penalty is applicable for voluntary ITC reversal without a show cause notice, and how different sections of the GST law (like 74(5), 74(8), 74(11), and 122) impact the penalty rates based on the timing of tax payment.

Jamil Ahmed

60 Points Posted on 08 June 2023

This issue is not covered under the instruction aa mentioned or Section 75(12). Interest and penalty imposable.

Rajendra Prasad

Employee Private

1142 Points Posted on 08 June 2023

In my knowledge and experience, as per Section 74(5) any liability has been discharged before issuance of Notice, GST along with applicable interest and penalty 15% has to be payable. If tax paid after issuance of Notice penalty is 25% as per Sec 74(8) and taxes paid after passing order and with in 30 days penalty will be 50% as per Sec 74(11)

Else 100% penalty is applicable as per Section 122.