Penalty Under Section 125 of CGST Act

[NILESH PITALE]

Dear Expert

In GST Audit Case, Auditing Officer has Imposed Penalty U/s 125 for Non-Filling of ITC-04, On the Other Hand From inception of GST Era We are Very Prompt and Diligent in Paying taxes & Filling of the Returns, Mere Lapse of Filling of ITC 04 can be cause for invocation of Section 125

Please Guide.

[Raam Srinivasan Swaminathan Kalpathi]

There is no specific penalty for non-filing or belated filing of ITC-04 and hence the Suptt. has chosen to levy general penalty u/s. 125 (max amt being 25k X 2 per year).  If the amount of levy is insignificant it would be better to buy peace by paying up.  Else, the demand can be contested for a lesser value considering that ITC-04 has no revenue implications on the department.

Also, to be practical, GST audit u/s. 65 is like unsheathing of the sword.  Dept has to see blood for the sword to be sheathed back.  The Suptt whosoever came  for audit has to show some revenue collection, else, he would stand scrutiny before the GCM (group committee meeting of ACs).  As there was no other adverse findings he has very conveniently chosen Sec. 125.  

If the Suptt has charged the  maximum penalty please consider filing an Appeal with FAA.  You may take a call based purely on the quantum of penalty.

Thanks

[Sadanand Bulbule]

In terms of Rule 45 [3] of the CGST Rules, filing of ITC-04 is mandatory, irrespective of number of change of hands in the chain of such transactions. Invocation of Section 125 depends upon the prudence of the AO.

AI Summary

Penalty Imposed Under Section 125 of CGST Act for ITC-04 Non-Filing Sparks Debate on Compliance and Appeals An auditing officer imposed a penalty under Section 125 of the CGST Act for not filing ITC-04, despite the party's consistent tax compliance. One respondent suggested that since there is no specific penalty for ITC-04 non-filing, the officer used a general penalty, advising either payment for peace or contesting the demand due to ITC-04's lack of revenue impact. Another respondent emphasized that filing ITC-04 is mandatory, and invoking Section 125 is at the officer's discretion. They advised considering an appeal if the maximum penalty was charged, based on the penalty's amount.