COTTON. WRONG PAYMENT OF TAX UNDER FCM.

[Sadanand Bulbule]

Dear experts

In terms of Notification No.43/2017-CTR dated 14/11/2017, a registered person is liable to pay tax under RMC on purchase of 'Raw cotton from agriculturist' under Section 9[3] of the CGST Act.

However a taxpayer under the influence of misguidance, has paid tax under FCM on supply of such Raw cotton purchased from agriculturists and it is manifest in the books of account and financial statements.

But the Adjudicating Authority has again levied tax/interest/penalty by way of a consolidated order for five years under Section 74 on such purchase under RMC without considering the actual of payment of tax under FCM by the taxpayer.

Although there is procedural lapse, what are adverse revenue implications? And what is the remedy? An appeal under Section 107 or a rectification under Section 161?

Plz clarify.

AI Summary

Taxpayer Penalized for Mistaken Payment Method; Appeal Suggested Despite Initial Payment Recognition Issues Under Section 74 A taxpayer mistakenly paid tax under the Forward Charge Mechanism (FCM) instead of the Reverse Charge Mechanism (RCM) for raw cotton purchased from agriculturists, as per Notification No. 43/2017-CTR. Despite this, the Adjudicating Authority imposed additional tax, interest, and penalties under Section 74 for five years, disregarding the initial tax payment. Experts suggest that rectification under Section 161 is unlikely to succeed, and recommend filing an appeal under Section 107, despite the requirement to deposit 10% of the disputed amount. The consensus is that the government has already received its revenue, and further demands are unjustified.