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CA Final · Indirect Tax Laws · Offences and Penalties and Ethical Aspects under GST

Kapoor Enterprises received an order from the Commissioner under Rule 162(3) allowing its compounding application and stating the compounding amount. The order was received on 1 March. Kapoor paid the compounding amount only on 15 April, after the 30-day period had ended. What is the legal position?

The compounding order becomes vitiated and void. Rule 162 requires the applicant to pay the compounding amount within thirty days of receiving the order. Failure to pay within that time voids the order, so the immunity does not take effect.

  1. AThe order is vitiated and void, because payment was not made within thirty days of receipt of the orderCorrect
  2. BThe order remains valid, and only interest is payable for the delay
  3. CThe order remains valid if the applicant has co-operated in the proceedings
  4. DThe order remains valid, but prosecution may be resumed only after a further notice

Explanation

Rule 162(6) requires payment within thirty days of receipt of the order, with proof of payment. Rule 162(7) says that if payment is not made in that time, the order is vitiated and void. The rules provide no interest-based cure. The co-operation requirement was omitted from sub-rule (3) in 2023.

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