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

Kavya Enterprises, Pune, received an order in FORM GST CPD-02 on 10 March allowing its compounding application and specifying the compounding amount. It failed to pay the amount, and filed proof of payment only on the 50th day after receipt of the order. What is the consequence under the CGST Rules?

The order becomes vitiated and void. The applicant must pay the compounding amount within thirty days of receiving the order and furnish proof. Missing that deadline voids the order. The ninety-day period applies to the Commissioner's decision on the application, not to the applicant's payment.

  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 but interest is charged on the compounding amount
  3. CThe order remains valid because the Commissioner may extend time without limit
  4. DThe order is void only if payment is not made within ninety days

Explanation

Rule 162(6) requires payment within thirty days from receipt of the order and proof of payment to the Commissioner. Rule 162(7) says failure makes the order vitiated and void. The ninety-day period relates to the Commissioner deciding the application, not to payment.

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