Non-filing of ITC-03 - does it attract penalty u/s.125

[Raam Srinivasan Swaminathan Kalpathi]

Client with rental income below Rs.50 lakhs had opted for composition scheme. As no ITC was availed against the said supply Form ITC-03 was not uploaded at the time of migration.

To recall the relevant provisions

Sec.18(4) - Where a registered person who has availed of ITC opts to pay tax under Section 10 ...., he shall pay an amount by way of debit to the ECL equivalent to the credit of ITC.....

Rule 3(3) Any RP who opts to pay tax under Section 10 shall electronically file....

Rule 44(3) relates to stocks for which invoices are not available.

The client has not availed any ITC relating to the output supply - leasing of property.

Department has issued SCN for non-filing of Form ITC-03. Reply was filed highlighting the above. We have now received PH proposing Sec.125 penaly of Rs. 25,000 X 2.

Sincerely request experts to provide their view on the stand to be adopted during PH.

Thanks

AI Summary

ITC-03 filing obligations under composition taxation raise general penalty exposure where no input tax credit was availed.
Section 18(4) requires a person who has availed input tax credit and opts for composition taxation to debit the electronic credit ledger by an amount equivalent to the credit. Rule 3(3) contains an electronic filing requirement for persons opting for composition taxation, while Rule 44(3) addresses stock where invoices are unavailable. The issue is whether non-filing of Form ITC-03, despite non-availment of credit, supports a proposed general penalty under section 125.