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CA Final · Indirect Tax Laws · Demands and Recovery

Anand Pharma Ltd. received a section 73 notice for 2019-20 and, before the notified date, filed an appeal that is still pending before the Appellate Authority. Separately, it owes an amount on account of an erroneous refund for 2018-19. Anand pays the full tax in the section 73 notice by the notified date, without withdrawing its appeal, and wants the section 128A waiver for all dues. Which statement is correct?

Neither dues qualify. Section 128A bars the waiver where the person's appeal is pending and not withdrawn by the notified date, and it separately excludes amounts payable on account of erroneous refund. Full payment of the notice tax does not override these exclusions.

  1. AWaiver applies to both the notice and the erroneous refund amount, because the tax is fully paid
  2. BWaiver applies to the notice, since the appeal relates to a different stage
  3. CWaiver applies to neither: the pending unwithdrawn appeal blocks the notice waiver, and amounts on account of erroneous refund are excludedCorrect
  4. DWaiver applies to the erroneous refund but not to the notice

Explanation

Section 128A(3) states the waiver does not apply where an appeal or writ petition filed by the person is pending and has not been withdrawn by the notified date. Section 128A(2) excludes any amount payable on account of erroneous refund. So neither amount qualifies. The key distractor fails because payment alone does not cure a pending, unwithdrawn appeal.

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