Penalty u/s 73(11) of CGST, 2017

[SUBRATA RAY]

Audit conducted u/s 65 by the department and after audit observation SCN was issued u/s 73(11) of the CGST Act, 2017 for imposition of penalty for non payment of self assessed tax within 30 days from due date. Is there any defence can be taken on some relevant grounds to counter imposition of penalty

[KASTURI SETHI]

Already replied.

What circumstances led to non-payment of self-assessed tax within 30 days ? Elaborate pl.

[SUBRATA RAY]

Due to finanancial stringency could not pay within due date

[Padmanathan KV]

Consider this position:

75(12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.

Explanation.––For the purposes of this sub-section, the expression “self-assessed tax" shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.

Considering the non-obstante clause in Section 75(12) which apparently overrides 73 and 74, can a stand be taken that only the "self-assessed tax" can be recovered only through sec. 79 and cannot be demanded under 73 along with penalty?

[KASTURI SETHI]

In my view, the factum of 'overriding' does not exist.

[KASTURI SETHI]

Section 79 (corresponding to Section 87 of the Finance Act, 94) is more 'dangerous' as compared to Section 73. Section 73 accords an opportunity to defend but as per Section 79 admitted/declared liability on the basis of self-assessment has to be deposited along with interest without SCN. Section 79 talks of' notice' and NOT 'show cause notice'.

Peruse the powers vested with the Govt. under Section 79 of CGST Act.

[Amit Agrawal]

Kindly refer to answers given against Serial No. 2 of Circular No. 76/50/2018-GST dated 31st December, 2018, wherein it is clarified as follows:

"...........

3. The provisions of section 73 of the CGST Act are generally not invoked in case of delayed filing of the return in FORM GSTR-3B because tax along with applicable interest has already been paid but after the due date for payment of such tax. It is accordingly clarified that penalty under the provisions of section 73(11) of the CGST Act is not payable in such cases. It is further clarified that since the tax has been paid late in contravention of the provisions of the CGST Act, a general penalty under section 125 of the CGST Act may be imposed after following the due process of law."

These are ex facie views of mine and the same should not be construed as professional advice/suggestion.

[KASTURI SETHI]

Dear Querist,

Circular No. 76/50/2018-GST dated 31st December, 2018 talks of "sale by Govt. Department to unregistered person ---------------". It is mentioned in title and subject of the circular.

What is the constitution of your firm ?

[Amit Agrawal]

Dear Querist,

The clarifications given by Board against Serial No. Serial No. 2 of Circular No. 76/50/2018-GST dated 31st December, 2018, is IRRESPECTIVE of the the constitution of taxpayer-firm.

Further, kindly also note that said circular is issued by the Board in exercise of its powers conferred under section 168 (1) of the CGST Act, 2017 and said Section 168 (1) reads as follows:

"168. (1) The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the implementation of this Act, issue such orders, instructions or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions."

These are ex facie views of mine and the same should not be construed as professional advice/suggestion.

AI Summary

Penalty under section 73(11) for late self assessed tax may be avoided where tax was paid late with interest.
The dispute concerns imposition of penalty under section 73(11) for non payment of self assessed tax within thirty days after the due date following an audit under section 65. Possible defences include demonstration of late payment with interest, reliance on administrative guidance that section 73 is generally not invoked where tax is paid late (with potential recourse to a general penalty under section 125), and arguments about the interplay of section 75(12) and section 79 which may channel recovery of self assessed tax through section 79 procedures rather than by section 73 penalty.