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CA Final · Indirect Tax Laws · Demands and Recovery

Shree Ganesh Pvt Ltd has a notice under section 73(1) for tax of Rs 6,00,000 for the period April 2018 to March 2019. No order under section 73(9) has been issued, and no appeal or writ is pending. Separately, it has an erroneous refund demand of Rs 1,50,000 for the same period. Assume the notified date for payment under section 128A has been fixed. Which statement is correct?

Paying the full Rs 6,00,000 tax by the notified date waives interest and penalty on the section 73(1) notice and concludes those proceedings. The waiver under section 128A does not apply to the erroneous refund amount of Rs 1,50,000, which remains payable with its consequences.

  1. APaying Rs 6,00,000 by the notified date waives interest and penalty on the notice, but the waiver does not extend to the erroneous refund amountCorrect
  2. BPaying Rs 7,50,000 by the notified date waives interest and penalty on both amounts
  3. CPaying Rs 6,00,000 after the notified date also waives interest and penalty on the notice
  4. DPaying Rs 1,50,000 alone by the notified date concludes all proceedings on both demands

Explanation

Section 128A(1)(a) covers notices under section 73(1) for 1 July 2017 to 31 March 2020 when the full tax is paid by the notified date, so interest and penalty are not payable. Section 128A(2) excludes amounts payable on account of erroneous refund. The second option is wrong for that reason, and payment after the notified date does not qualify.

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