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CMA Final · Indirect Tax Laws and Practice · Anti-profiteering

The Authority passes an order on 10 March holding that Sundaram Foods Ltd profiteered Rs 6,50,000. The company deposits the full profiteered amount on 5 April of the same year (26 days after the order). What is the penalty under section 171(3A) of the CGST Act?

No penalty is leviable. The proviso to section 171(3A) exempts a person who deposits the profiteered amount within thirty days of the date of the Authority's order, and deposit after 26 days falls inside that window, so the Rs 65,000 ten per cent penalty does not apply.

  1. ARs 65,000, since penalty is levied automatically on every profiteering finding
  2. BNil, since the profiteered amount was deposited within thirty days of the orderCorrect
  3. CRs 32,500, being a reduced penalty for deposit within thirty days
  4. DRs 6,50,000, being a penalty equal to the profiteered amount

Explanation

The proviso to section 171(3A) says no penalty is leviable if the profiteered amount is deposited within thirty days of the date of passing of the order. From 10 March to 5 April is 26 days, which is within thirty days. A reduced penalty is not provided in the text.

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