CA Final · Indirect Tax Laws · Assessment and Audit
Himalaya Traders Ltd applied for payment of tax on a provisional basis because the value of a supply could not be determined. The proper officer's order in FORM GST ASMT-04 requires a bond of Rs 40,00,000 covering the tax. Under rule 98, what is the maximum security by way of bank guarantee that can be demanded?
The maximum security is Rs 10,00,000. Rule 98(3) caps the bank guarantee at twenty-five per cent of the amount covered under the bond, and 25% of Rs 40,00,000 is Rs 10,00,000.
- ARs 4,00,000
- BRs 20,00,000
- CRs 10,00,000Correct
- DRs 40,00,000
Explanation
Rule 98(3) limits the security to not exceeding 25% of the amount covered under the bond. 25% of Rs 40,00,000 = Rs 10,00,000. Rs 4,00,000 wrongly uses 10%, and Rs 20,00,000 uses 50%.
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