Mr. Vikramaditya Rao, a registered supplier under GST in the State of Gujarat, is engaged in providing financial consultancy services across various…
CA Final · Indirect Tax Laws · RTP · January 2026
Mr. Vikramaditya Rao, a registered supplier under GST in the State of Gujarat, is engaged in providing financial consultancy services across various States in India. He made several taxable supplies during the month of April. On 18 th April, he collected the IGST of 15,50,000 from his clients for services rendered. However, owing to internal accounting delays and a system migration going on in his firm, Mr. Rao failed to deposit the said tax amount within 30 days from the due date of payment. No Show Cause Notice (SCN) had been issued by the GST Department until that time. Before any such notice could be served, Mr. Vikramaditya Rao, upon reconciling his accounts, voluntarily decided to discharge his outstanding tax liability. He believes that if the tax is paid before the issuance of an SCN, no penalty would be levied and only interest, if any, would be payable. Accordingly, Mr. Rao self-assessed his total tax liability of 15,50,000 and made the payment on 26 th June. You are required to determine, under the relevant provisions of the GST law and rules made thereunder, the interest and penalty, if any, payable by Mr. Vikramaditya Rao in this case, assuming that he has not opted for Quarterly Return Monthly Payment scheme.
Suggested Answer and Working Notes:
Due date for payment of tax collected on 18 th April is 20 th May. However, since tax is actually paid on 26 th June, interest @ 18% p.a. is payable for the period for which the tax remains unpaid [37 days] in terms of section 50 read with Notification No. 13/2017 CT dated 28.06.2017. Amount of interest is as follows: = 15,50,000 × 18% × 37/365 = 28,282 (rounded off) As per section 74A (11) of the CGST Act, 2017 read with section 20 of the IGST Act, 2017 where self-assessed tax/any amount collected as tax is not paid within 30 days from due date of payment of tax, then, inter alia, option to pay such tax before issuance of SCN to avoid penalty, is not available. Consequently, penalty equivalent to (i) 10% of tax, viz.,1,55,500 or (ii) 20,000, whichever is higher, is payable in terms of section 74A (5) (i) of the CGST Act, 2017 read with section 20 of the IGST Act, 2017. Therefore, penalty of 1,55,500 is payable by Vikramaditya Rao in the given case.
Topics: Payment of Tax
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