Penalty rebate before order passed and after order passed

[KALLESHAMURTHY MURTHY K.N.]

Dear Sirs,

Tax paid after the time limit attracts a 100% penalty before the order is passed. If the Taxpayer has paid the tax with interest after the order is passed within the time limit, he will get a 50% rebate on the penalty. Doesn't such a circumstance cause injustice to the Taxpayer who paid the tax before the order passed?

For example,

ABC received SCN on 20-09-2024, the tax due was paid belatedly on 31-10-2024. and the Order was passed on 30-11-2024 levying a 100% penalty for the delayed payment.

XYZ received SCN on 20-08-2024 and did not pay the tax. The order was passed on 30-11-2024. The tax due was paid on 26-12-2024. and gets a 50% rebate on penalty.

ABC was deprived of a 50% penalty rebate for early payment before the order passed.

AI Summary

Debate Over GST Penalty Rebates: Fairness of 100% Penalty Pre-Order vs. 50% Post-Order Under Sections 74 & 122 A taxpayer raised a concern about the perceived unfairness in GST penalty rebates. If tax is paid late but before an order is passed, a 100% penalty applies, whereas a 50% penalty rebate is available if payment is made after the order within the specified period. The discussion centers on the conditions under Sections 74 and 122, which outline different penalty reductions based on timing and completeness of tax and interest payments. Participants debated the logic and fairness of these provisions, with suggestions to address the issue with the GST Council. Some argue the provisions allow taxpayers to choose their penalty based on compliance timing.