CMA Final · Indirect Tax Laws and Practice · Refund
Under section 114AC, an exporter obtained invoices by collusion to use input tax credit for paying tax on goods exported under claim of refund. The refund claimed is Rs 8,00,000. What is the maximum penalty?
The penalty may go up to five times the refund claimed, so for a claim of Rs 8,00,000 the maximum penalty is Rs 40,00,000. The section applies where invoices were obtained by fraud, collusion, wilful misstatement or suppression to use input tax credit.
- ARs 8,00,000, equal to the refund claimed
- BRs 16,00,000, being twice the refund
- CRs 40,00,000, being five times the refundCorrect
- DRs 80,00,000, being ten times the refund
Explanation
Section 114AC provides a penalty not exceeding five times the refund claimed. 5 x 8,00,000 = Rs 40,00,000. Ten times or equal amounts are not provided in the section.
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