VIOLATION OF RULE 86B LIABLE FOR GENERAL PENALTY OR FURTHER PAY TAX BY CASH?

[BARUN MUKHERJEE]

Respected experts,

A taxpayer had inadvertently disbursed his tax liability by utilizing 100% ITC instead of utilizing of 99% ITC. Now this discrepancy has been identified by GST Dept. during Audit and demanded 1% tax liability by cash along with interest and penalty in compliance with Rule 86B. Now my question is that as the tax payer had already paid the tax by utilizing 100% ITC which was violation of Rule 86B, Dept. can demand further 1% tax by cash along with interest or impose only general penalty u/s 125?

[Shilpi Jain]

Considering this condition is valid, can demand. Pay and adjust the excess tax paid in subsequent periods.

However in one of the decisions it has been noted to be ultra vires though not final.

AM Enterprises 2024 (9) TMI 1485 - HIMACHAL PRADESH HIGH COURT

[KASTURI SETHI]

Can demand further 1% tax by cash along with interest or impose only general penalty u/s 125  ?

Ans. YES for both queries.