Penalty concession u/s 74(8) for offences u/s 122(1)

[SUSHIL BANSAL]

Dear experts,

certain penalty reductions timeline has been prescribed u/s 74(8). As per my understanding the penalty reduction benefit is available only when the SCN issued by invoking section 74. If section 74 has been invoked then certain offences as prescribed u/s 122(1) can also get benefit of reduced penalty.I am presenting text of one such show cause:

......

2. It appears that the taxable person has passed on GST credit amounting to Rs. 900000 as the taxable person has only issued GST invoices and passed on ITC to the recipients without actual supply of the underlying goods in contravention of section 7 of the CGST Act 2017,& hence liable to be penalized under section 122(1)(ii).

3. Further, the taxable person appears to have short paid tax amounting to Rs. 1,50,000/- as E-way bills were generated for invoices as detailed , these invoices were not declared as the outward supply in GSTR 1 returns,nor the tax was deposited in the returns of GSTR 3B against such supplies in contravention of section 7, section 9(1), section 37 of the CGST Act 2017. The tax amounting to Rs. 1,50,000- appears to be recoverable under section 74,Int u/s 50, penalty u/s 122(1)(i)

4. In the view of the above, it is clear that the taxpayer has willfully suppressed the facts with intend to claim refund of fraudulent ITC so obtained. Therefore, provisions of section 74 are invokable in this case.

I request experts to give your opinion whether benefits of reduced penalty u/s 74(8) will be available or not

[KASTURI SETHI]

Pl.go through Explanation I (ii) below Section 74(11) of CGST Act.

If Section 122 (i) & (ii) have been invoked in the said SCN issued under Section 74, the benefit of reduced penalty will be available.

If refund is claimed fraudulently in this case, those proceedings will be initiated separately..

[SUSHIL BANSAL]

Tysm sir

[Amit Agrawal]

Kindly refer to Circular No. 171/03/2022-GST dated 06.07.2022.

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

AI Summary

Penalty concession under section 74(8) applies where an SCN invokes section 74 and includes offences under section 122. Where a show-cause notice is issued under the special assessment regime and expressly invokes penal provisions for issuance of invoices without supply and related offences, the reduced penalty framework applies to those penal counts if they are included within the notice; allegations of fraudulent refund may be pursued separately.