CA Final · Indirect Tax Laws · Refund
Ishaan Exports Ltd claimed a refund of Rs 8,00,000 of duty or tax on goods entered for exportation. Investigation showed that it had obtained invoices by fraud and utilised input tax credit on them to discharge the duty or tax on those goods. What is the maximum penalty under Section 114AC of the Customs Act, 1962?
The maximum penalty is Rs 40,00,000. Section 114AC makes a person who fraudulently obtained invoices to utilise input tax credit for duty or tax on goods exported under a refund claim liable to a penalty not exceeding five times the refund claimed.
- ARs 8,00,000, being the refund claimed
- BRs 24,00,000, being three times the refund claimed
- CRs 40,00,000, being five times the refund claimedCorrect
- DRs 80,00,000, being ten times the refund claimed
Explanation
Section 114AC provides that a person who obtained an invoice by fraud, collusion, wilful misstatement or suppression of facts to utilise input tax credit for discharging duty or tax on goods entered for exportation under claim of refund is liable to a penalty not exceeding five times the refund claimed. Five times Rs 8,00,000 is Rs 40,00,000.
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