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

Penalty reduction under GST depends on timely full payment of tax and interest, otherwise full penalty applies.
Reduced penalty relief is available only where the taxpayer deposits the full tax and full interest within the specific statutory windows tied to notice and order stages; any shortfall in tax or interest disqualifies the taxpayer from the reduced penalty for that window, and absence of full payment may lead to imposition of the full penalty. The reduced penalty provisions function as a time bound settlement mechanism distinct from other penalty provisions and must be strictly followed to secure any rebate.