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CA Final · Indirect Tax Laws · Demands and Recovery

Vardhan Pharma has a section 73(9) order for tax of Rs 10,00,000 for FY 2019-20. It pays the full tax by the notified date under section 128A, and the proceedings are deemed concluded. It had earlier paid Rs 90,000 as interest under protest. It also separately owes Rs 2,00,000 arising from an erroneous refund, covered by another order. Which statement is correct?

The Rs 90,000 interest already paid is not refundable, the waiver does not cover the erroneous refund amount, and once the tax is paid and proceedings are deemed concluded, no appeal under section 107(1) lies against the section 73(9) order. All three follow from section 128A.

  1. AThe Rs 90,000 interest is refunded and the erroneous refund amount is also waived of interest and penalty
  2. BThe Rs 90,000 interest is not refundable, the waiver does not apply to the erroneous refund amount, and no appeal lies under section 107(1) against the section 73(9) orderCorrect
  3. CThe Rs 90,000 is refundable, but no appeal lies against the order
  4. DThe waiver extends to the erroneous refund, but the Rs 90,000 interest paid is not refundable

Explanation

Section 128A provides that where interest and penalty were already paid, no refund is available. Sub-section (2) excludes any amount payable on account of erroneous refund from the waiver. Sub-section (4) bars an appeal under section 107(1) against an order under section 73(9) once the amount is paid and proceedings are deemed concluded. Only this option reflects all three rules.

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