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CA Final · Indirect Tax Laws · Payment of Tax

Gaurav Steels Ltd. furnished its return declaring supplies and paid tax after the due date, but a proceeding under section 73 had already commenced for that tax period before it filed the return. Which rule governs the computation of interest on the tax payable for those supplies?

Rule 88B(2) applies. Because the return was furnished after proceedings under section 73 began, the cash-ledger-only basis in Rule 88B(1) is excluded, so interest is computed on the unpaid tax from the due date of payment until the date it is paid.

  1. ARule 88B(1), on the portion paid through the electronic cash ledger only
  2. BRule 88B(2), on the amount of tax remaining unpaid from the due date till paymentCorrect
  3. CRule 88B(3), on ITC wrongly availed and utilised
  4. DRule 158, as the interest is payable in instalments

Explanation

Rule 88B(1) excludes cases where the return is furnished after commencement of proceedings under section 73 or 74. Such cases fall under 'all other cases' in Rule 88B(2), where interest runs on the unpaid tax from the due date till payment. Rule 88B(3) concerns wrongly availed ITC, and Rule 158 deals with instalments, not interest computation.

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