M/s Karim Associates (supplier) was issued show cause notice under section 74 of the CGST Act, 2017 by the Adjudicating Authority (AA). In the final…
CA Final · Indirect Tax Laws · PYQS · May 2025
M/s Karim Associates (supplier) was issued show cause notice under section 74 of the CGST Act, 2017 by the Adjudicating Authority (AA). In the final order dated 30-08-2024 issued to M/s Karim Associates, the Additional Commissioner of Central Tax (AA) confirmed the tax demand of 60,00,000. Demand on account of penalty of equal amount and interest amounting to 16,00,000 was also confirmed. However, the Revisional Authority (RA), using the powers under section 108 of the CGST Act, on its own motion called for the records and found that the order passed by the AA is erroneous in so far as it is prejudicial to the interest of revenue and enhanced the tax demand to 70,00,000, penalty of equal amount and interest amounting to 20,00,000 by order dated 15-11-2024. The supplier admitted tax demand of 20,00,000, interest amounting to 5,00,000 and penalty for 20,00,000 and deposited the admitted tax, interest and penalty on 30-11-2024. For the balance amount, the supplier decided to file an appeal and appointed a Chartered Accountant for this purpose. The appeal was filed with the necessary pre deposit of the amount and the same was decided in favour of M/s Karim Associates on dated 28-02-2025. The application for refund of pre-deposit was made on 01-03-2025 and refund was granted on 14-03-2025. Considering the above facts, you are required to answer the following: (1) The appellate authority to which M/s Karim Associates would be required to file the appeal against the order of RA. (2) The amount of pre-deposit required to be deposited along with the above appeal. (3) Compute the amount of interest payable on refund of such pre-deposit under section 115 of the CGST Act, 2017. (4) The amount of pre-deposit required assuming if the appeal is to be filed against the orders of appellate authority with original demand and after considering the same amount of payment of admitted demand deposited on 30-11-2024.
Suggested Answer and Working Notes:
(a) (1) M/s Karim Associates would be required to file an appeal against the order of Revisional Authority to the Appellate Tribunal (GSTAT). (2) The amount of pre-deposit is computed as under- (a) full amount of tax (20lakh), interest (5lakh) and penalty (20lakh) admitted, i.e.45 lakh and (b) 20% of the remaining amount of tax in dispute [10lakh (20% of 50lakh)], Thus, amount of pre-deposit would be 55lakh (45+10). (3) Interest on refund of pre-deposit shall be payable @ 9% per annum from the date of payment (30-11-2024) till the date of refund of such amount (14-03-2025), i.e. for 104 days, as under: = 10,00,000 × 9% × 104/365 = 25643.84 [₹ 25,644 (rounded off)] (4) In this case, the appeal should be filed to Appellate Authority and the amount of pre-deposit is computed as under- (i) Full amount of tax, interest and penalty admitted, i.e.,45 lakh (ii) 10% of the tax in dispute, i.e.4 lakh (10% of 40lakh) Therefore, amount of pre-deposit to be made is 49lakh (45lakh +4 lakh).
Topics: Appeals and Revision
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