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CA Final · Indirect Tax Laws · Demands and Recovery

Meridian Pharma has an order under section 73(9) for a period within 1 July 2017 to 31 March 2020, with tax of ₹8,00,000, interest of ₹2,00,000 and penalty of ₹80,000. It has not appealed, and no appeal or writ is pending. Under section 128A, which is correct if it pays the full tax on or before the notified date?

On paying the full tax by the notified date, interest under section 50 and penalty are both waived and the proceedings are deemed concluded. Section 128A(4) also bars an appeal under section 107(1) against that order, so the taxpayer cannot appeal afterwards.

  1. AIt must pay tax plus interest, with penalty waived
  2. BIt must pay tax plus penalty, with interest waived
  3. CNo interest under section 50 and no penalty is payable, proceedings are deemed concluded, and no appeal under section 107(1) lies against that orderCorrect
  4. DIt pays tax only, but may still file an appeal against the order under section 107(1)

Explanation

Section 128A(1)(b) covers an order under section 73(9) where no appellate order has been passed. Paying the full tax by the notified date waives interest and penalty and deems the proceedings concluded. Section 128A(4) bars an appeal under section 107(1) once the amount is paid. The last option is wrong because that appeal right is barred.

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