The Delhi High Court allowed Delhi Sales Corporation to pay a fine u/s 74(5) related to the Goods and Services Tax, even after they had received a SCN notice U/S 74(8) asking them to explain why they should not be penalised.
A panel of judges, Justices Prathiba M. Singh and Shail Jain, noted that the Petitioner Corporation had already paid the necessary taxes and interest under Section 74(5).
Section 74 addresses situations in which taxes have not been filed correctly or have been paid less than the amount owed. It outlines the process for the initial notice u/s 74(1), which is issued to taxpayers, asking them to explain why the unpaid tax, along with any interest charges, should not be collected.
The person on this notice (pre-SCN) being issued liable with tax has the option u/s 74(5) to file the tax, along with 15% of the penalty on his own. If it undergoes, then no additional notice shall be provided to the person.
If the amount is not paid and a SCN is actually provided and subsequently, within 30 days, the tax, including interest and penalty equal to 25% is paid as per section 74(8), the proceedings originating from the SCN are considered to be concluded.
On 6th July 2022, the pre-SCN was issued before the applicant. In answer to that, the applicant filed the tax, including interest u/s 73(5). But the 15% penalty was not filed.
As an outcome, SCN was issued by the department dated 7th July 2024, and thereafter raised demand for a sum of Rs 1,32,467.
The applicant specified that before the issuance of the SCN, the whole demand was paid in the month of August 2022 itself. Therefore, no additional penalty could be charged.
The Department contended the appeal.
The Court, after hearing the parties, stated that as tax and interest stood paid within 30 days specified u/s 74(5), “if the Petitioner deposits 15% of the penalty amount, the SCN would be deemed to be closed in terms of Section 74(5) of the CGST Act.”
| Case Title | Delhi Sales Corporation vs. The Principal Commissioner Of Central Tax & Ors. |
| Case No. | W.P.(C) 15646/2025 & CM APPL. 63996/2025 |
| For Petitioner | Mr. M.A. Ansari, Ms. Tabbassum Firdause, Mohd. Saleem, Md. Imran Ahmad & Mr. Ahmad Ansari, Advs |
| For Respondent | Mr. Akash Verma, Adv. for R-1. Mr. Sandeep Tyagi, SPC, UOI. |
| Delhi High Court | Read Order |
