GST Demand under section 73 and 74

GST Demand under section 73 and 74

It is possible that there is a difference in the way the taxpayer has interpreted the provisions of law and paid GST on a self-assessment basis and the way Department expects the taxpayer to interpret the provisions of law and pay taxes. There is no denial of the fact that there are tax evaders and fraudsters who wilfully make misstatements. But majorly it is because there is a gap in understanding, interpretation, and implementation of the law which results in tax demands, survey, scrutiny, litigation, assessment, adjudication, etc.

Demand under sections 73 and 74 – Demand and recovery proceedings when tax is not paid/short paid/erroneously refunded /ITC wrongly availed or utilized

GST law has laid down provisions that clearly define the rank of the officer who can issue notices, timelines for issuing notices, and timelines for passing the order. GST Department cannot unilaterally seek payment of tax without providing the opportunity of being heard for ascertaining reasons for non-payment/short payment/erroneous refund or excess claim of ITC.

Section 73 – If it was not done with intention of fraud or any wilful misstatement or suppression of facts

Section 73(2) – Show Cause Notice mentioning the specific provision which has been violated can be issued within 33 months from the extended due date of filing the Annual Return for that financial year.

Section 73(10) – Order can be passed latest within 36 months from the extended due date of filing the Annual Return for that financial year.

Section 74 – If it was done with intention of fraud or any wilful misstatement or suppression of facts

Section 74(2) – Show Cause Notice mentioning the specific provision which has been violated can be issued within 54 months from the extended due date of filing the Annual Return for that financial year.

Section 74(10) – Order can be passed latest within 60 months from the extended due date of filing the Annual Return for that financial year.

Time Limit for issuance of notice and passing the order u/s 73 and 74 

Note: For Financial Year 2021-22 it is presumed that the due date of GST Annual Return will not be extended.

Who can issue the SCN u/s 73 & 74? |Monetary limits for issuing SCN

CBIC had notified the rank of officers based on monetary limits who can issue a notice under section 73 or 74 for non-payment of tax/short payment of tax/availing or utilizing input tax credit/ erroneously claiming the refund of tax.