Penalty U/s 74

[Komal Agarwal]

Dear Sir,

GST department had issued an Intimation Notice U/s 74 in Form DRC-01A to my client for reversal of ITC of Rs. 2,10,000/- plus applicable interest and penalty @15% of tax on 12/07/2024. Client deposited tax amount of Rs. 2,10,000/- via DRC-03 on 16/07/2024. He did not deposited interest and applicable penalty.

As on 27/07/2024 the department issued Show Cause Notice U/s 74 for payment of interest and Penalty as per section 74 of CGST Act. Client did not respond the SCN.

Finally the demand order was issued on 01/02/2025 for payment of applicable interest and 100% Penalty.

The provision of Section 74 provide the penalty @15% if payment made before issue of SCN, 25% if payment made within 30 days of SCN, 50% if payment made thereafter, 100% in other case.

In this case client had already paid tax before issue of SCN. Please tell me the applicable penalty rate to the client.

Thanks

Dear Sir,

GST department had issued an Intimation Notice U/s 74 in Form DRC-01A to my client for reversal of ITC of Rs. 2,10,000/- plus applicable interest and penalty @15% of tax on 12/07/2024. Client deposited tax amount of Rs. 2,10,000/- via DRC-03 on 16/07/2024. He did not deposited interest and applicable penalty.

As on 27/07/2024 the department issued Show Cause Notice U/s 74 for payment of interest and Penalty as per section 74 of CGST Act. Client did not respond the SCN.

Finally the demand order was issued on 01/02/2025 for payment of applicable interest and 100% Penalty.

The provision of Section 74 provide the penalty @15% if payment made before issue of SCN, 25% if payment made within 30 days of SCN, 50% if payment made thereafter, 100% in other case.

In this case client had already paid tax before issue of SCN. Please tell me the applicable penalty rate to the client.

Thanks

AI Summary

Client Faces 100% Penalty Under CGST Section 74 for Unpaid Interest Despite Pre-SCN Tax Payment A client received an Intimation Notice under Section 74 of the CGST Act for reversing an ITC of Rs. 2,10,000, plus interest and a 15% penalty. The client paid the tax but not the interest or penalty before a Show Cause Notice (SCN) was issued. Consequently, a demand order was issued for interest and a 100% penalty. Section 74 stipulates a 15% penalty if payment is made before the SCN, 25% within 30 days of the SCN, 50% thereafter, and 100% otherwise. The forum discusses the applicability of penalties, suggesting that the client's failure to pay interest led to the 100% penalty.