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

The Commissioner allows Anand Pharma Ltd's compounding application by an order in FORM GST CPD-02 dated 1 March. Anand Pharma had paid the tax, interest and penalty before the application was allowed. The company does not pay the compounding amount until 10 May, and the order was received on 1 March. What is the position under Rule 162?

The order becomes vitiated and void. The compounding amount must be paid within thirty days of receiving the order, and failure to do so voids the order automatically. Payment on 10 May is beyond that period, so the immunity does not stand.

  1. AThe order is valid, and interest alone is payable on the delay
  2. BThe order is vitiated and void because the compounding amount was not paid within thirty days of receipt of the orderCorrect
  3. CThe order is valid as long as it is paid before the prosecution ends
  4. DThe order becomes void only if the Commissioner issues a fresh notice

Explanation

Rule 162(6) requires payment of the compounding amount within thirty days of receipt of the order and proof of payment to the Commissioner. Rule 162(7) says that on failure the order is vitiated and void. From 1 March, thirty days end on 31 March, so payment on 10 May is late and no fresh notice is needed.

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