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

The Authority passes an order on 5 March holding that Sudarshan Foods Pvt Ltd profiteered Rs 4,00,000 by not passing on ITC benefit. The company deposits the profiteered amount on 3 April, which is 29 days after the order. What is the position on penalty under section 171(3A)?

No penalty is leviable. The proviso to section 171(3A) says no penalty applies if the profiteered amount is deposited within thirty days of the Authority's order, and the deposit was made on day 29.

  1. APenalty of Rs 40,000 is leviable because the deposit was made after the order date
  2. BPenalty of Rs 4,00,000 is leviable as it equals the profiteered amount
  3. CNo penalty is leviable, as the deposit was within thirty days of the orderCorrect
  4. DPenalty of Rs 20,000 is leviable at half rate for deposit within thirty days

Explanation

The proviso to section 171(3A) exempts from penalty if the profiteered amount is deposited within thirty days of the date of the order. 29 days is within the limit, so the 10% penalty of Rs 40,000 does not arise. No half-rate concession exists.

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