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Section 74(5) enables the dealer to pay 15% penalty on his own accord before receipt of a notice under Section 74(1) of the Act, it does not mean that, even without a show cause notice being issued, the dealer is obligated to pay penalty at 15% under Section 74(5) of the Act.

Section 79 of the CGST Act — Recovery Proceedings – The petitioner challenged the order on 20-8-2018, for the tax period March, 2018, directing the petitioner to pay tax and penal interest without issuing an assessment order under Section 61 of the Act and without issuing a show cause notice, as illegal, arbitrary and without jurisdiction. By the impugned order, the respondent directed payment of penalty at 15% along with interest under Section 50 read with Section 79(5) and Rule 143, failing which recovery proceedings would be initiated under section 79. The petitioner admitting that he is liable to pay tax and penal interest but questioned the validity of the assessment order in so far as the petitioner was called upon to pay penalty at 15%, contending that any proceedings for recovery of penalty must be preceded by a show cause notice which was not issued in the present case. .
Held that:- The Hon’ble High Court set aside the impugned order to the limited extent the petitioner was called upon to pay penalty at 15%. This order shall not disable the respondent from issuing a penalty notice and recover the penalty payable in terms of Section 74(1) of the Act.—D. Rama Kotiah And Co. Vs. State of Andhra Pradesh [2018] 04 TAXLOK.COM 139 (Telangana)