Prachi & Co. self-assessed its CGST liability as 90,000 for the month of April, but failed to make the payment. Subsequently, the Department…

Due date for payment of tax for the month of April is 20th May. As per section 74A of the CGST Act. 2017, where self-assessed tax is not paid within 30 days from due date of payment of such tax, penalty equivalent to 10% of tax or - 10,000, whichever is higher, is payable. Thus, option to pay tax within 60 days of issuance of show cause notice to avoid penalty, is not available in case of self-assessed tax. Since in the given case, Prachi & Co. has not paid the self-assessed tax within 30 days of due date [i.e. 20th May], penalty equivalent to: (i) 10% of tax, viz.,9,000 (10% of 90,000) or (ii) 10,000, whichever is higher, is payable by him under CGST Act, 2017. Equivalent amount of penalty is payable under SGST/UTGST Act. Hence, the stand taken by the Department that penalty will be levied on Prachi & Co. is correct, but the amount of penalty of 45,000 under the CGST Act is not correct.