CMA Final · Indirect Tax Laws and Practice · Anti-profiteering
Following a rate cut, an Authority finds that Sai Foods Ltd. profiteered Rs 8,00,000 and passes an order on 1 March. Consider the following: (i) the amount is deposited on 25 March; (ii) the amount is deposited on 10 April. Taking section 171(3A) and its proviso, what is the penalty in each case?
In case (i), the amount is deposited within thirty days of the order, so no penalty arises. In case (ii), deposit comes 40 days after the order, so the ten per cent penalty of Rs 80,000 applies on the profiteered Rs 8,00,000.
- A(i) Nil; (ii) Rs 80,000Correct
- B(i) Rs 80,000; (ii) Rs 80,000
- C(i) Nil; (ii) Nil
- D(i) Nil; (ii) Rs 8,00,000
Explanation
Penalty is 10% of Rs 8,00,000 = Rs 80,000. Deposit on 25 March is within thirty days of the order on 1 March, so no penalty is leviable. Deposit on 10 April is 40 days after the order, so the proviso does not apply and the Rs 80,000 penalty is leviable.
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