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

Penalty under Section 74: paying tax without interest can forfeit reduced penalty and attract the full penalty.
Section 74 offers staged penalty concessions only if tax and interest are paid within prescribed windows; payment of tax alone without interest forfeits the reduced penalty benefit and can lead to imposition of the full penalty by adjudication.