Liability Paid, Yet Recovery Being Initiated!

[Narayan Pujar]

An order u/s 74 was passed against one of my clients by the CGST Department, imposing a 100% penalty. This was because, at the time of passing the order, the officer couldn’t confirm if the client would avail the relief under Section 74(11), which allows a 50% penalty reduction if payment is made within 30 days.

The client has since made the payment within the stipulated time and adjusted all liabilities using the DRC-03A functionality. However, the SGST Department, which handles recovery, is still demanding the remaining 50% penalty. They argue it’s recoverable solely because it appears in the E-Liability Ledger, which they claim they cannot update.

Despite discharging all liabilities as per law, the SGST officer is threatening bank attachment for the so-called "outstanding" penalty. The Central GST Officer is reluctant in rectifying order to 50% penalty as it does not fall within Section 161.

What could be a possible solution to resolve this situation?

AI Summary

Penalty reduction under Section 74(11) prevents further recovery once statutory payment and adjustment are made.
A taxpayer who paid tax, interest and the prescribed reduced penalty within the statutory period adjusted liabilities via the portal, yet recovery authorities press for the residual penalty shown in the e liability ledger. The statutory mechanism that grants penalty reduction and deems proceedings concluded upon timely payment is said to be mandatory and cannot be displaced by portal entries; recommended actions include written representation, seeking rectification or higher remedy if administrative correction is not effected.