VIOLATION OF RULE 86B LIABLE FOR GENERAL PENALTY OR FURTHER PAY TAX BY CASH?
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?
Rule 86B cash deposit requirement may be demanded where ITC overutilisation occurred, with interest and penalty applicable. Misuse of input tax credit by utilising 100% instead of the permitted proportion under Rule 86B can lead the department to demand the remaining cash deposit along with interest and penalty; excess tax paid through ITC may be adjusted in subsequent periods, though one authority has observed the demand to be ultra vires without a final decision. (AI Summary)
Goods and Services Tax - GST
TaxTMI 
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