GST Demand under section 73 and 74

Last updated on April 13th, 2023 at 04:15 pm

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 the 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, surveys, 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 the GST Annual Return will not be extended.

Note: CBIC has extended the due dates for issuing notice u/s 73(2) and the time limit for passing order u/s 73(10) for FY 2017-18 vide a CGST Notification no. 13/2022 dated 5th July 2022.

Note: CBIC has further extended the due dates for issuing notice u/s 73(2) and the time limit for passing order u/s 73(10) for FY 2017-18, FY 2018-19, and FY 2019-20 vide a CGST Notification no. 09/2023 dated 31st March 2023.

Note: The period of 24 months beginning from 1st March 2020 to 28th February 2022 shall be excluded from the computation of the period of limitation for filing a refund application u/s 54 or 55 vide a CGST Notification no. 13/2022 dated 5th July 2022.

Note: The period of 24 months beginning from 1st March 2020 to 28th February 2022 shall be excluded from the computation of the period of limitation in the cases of recovery of erroneous refund i.e. Notice u/s 73(2) for recovery of erroneous refund can be issued up to  30th June 2025 vide a CGST Notification no. 13/2022 dated 5th July 2022.

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.

Penalty under section 73

Penalty under section 74

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CA Ankita Khetan

Founder at Financepost.in

Chartered Accountant in practice, DipIFRS (from ACCA, UK), Post Graduate in Commerce, Certified Independent Director (from IICA), and holds a certification in Forex and Treasury Management course (by ICAI).

She can be contacted at info.financepost@gmail.com

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