AGFTC and ITBA requests FM to reduce penalty u/s 73(9) of the CGST Act 2017

AGFTC and ITBA requests Finance Minister to reduce penalty u/s 73(9) of the CGST Act 2017

All Gujarat Federation of Tax Consultants (AGFTC) and Income Tax Bar Association (ITBA), Ahmedabad has given a Representation to Union Minister of Finance  to amend the penalty provision under section 73(9) of the CGST Act, 2017.

Section 73 of the CGST Act, 2017 provides for determination of tax paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts.

Sub section 9 of section 73 further provides for tax, interest and a penalty equivalent to ten percent of tax or  Rs. 10000/- (ten thousand rupees), whichever is higher.

It has been represented that as the section 73 is for tax paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts, the penalty provision for any genuine mistake is very harsh. It has been stated that in cases where tax amount is more than ten lacs rupees, Penalty of ten percent of tax is also very high. The penalty provision of ten percent of tax for any genuine mistake is very harsh.

The representation has pointed out that under Section 125 a general penalty has already been provided which may extend to twenty-five thousand rupees.

According to the representation made, in case of a genuine mistake , the penalty under section 73(9) should not be more than twenty-five thousand. It has bene illustrated that since the minimum penalty is Rs. 10000/-, even for a genuine mistake of small amount of Rs. 100/- total  penalty is 10000/- which is 100% of the demand.

Further, it has been pointed out that in the case where tax amount is more than ten lacs rupees , Penalty of ten percent of tax is also very high. The penalty provision of ten percent of tax for any genuine mistake is very harsh.

Relying on the provisions of Section 125 which provides for General penalty up to Rs. Twenty-five thousand rupees, it has been requested that for a genuine mistake of any registered dealer, the penalty under section 73(9) should not be more than twenty-five thousand.

Request made:

The Ministry has been requested to amend the minimum  penalty amount u/s 73(9) as under

(i) to provide for penalty equivalent to ten percent of tax or one thousand rupees, whichever is higher.

(ii) Alternatively, to provide for a penalty equivalent to ten percent of tax or twenty-five thousand rupees, whichever is lesser. 

Read Representation Click Here >>

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