Section 74 Determination of tax not paid, CGST Act, 2017

Posted on 10 June 2022 Category : GST Law

CGST Act, 2017, sec 74 Determination of tax not paid

The below post explains about Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts under section 74 of CGST Act,2017.

Section 74 of CGST Act, 2017 explains Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts as below: (The amendments if any will also be updated here soon).

The extract of Section 74 of CGST Act,2017 quoted below:

74 Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts.

74. (1) Where it appears to the proper officer that any tax has not been paid or short

paid or erroneously refunded or where input tax credit has been wrongly availed or utilised

by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall

serve notice on the person chargeable with tax which has not been so paid or which has been

so short paid or to whom the refund has erroneously been made, or who has wrongly availed

or utilised input tax credit, requiring him to show cause as to why he should not pay the

amount specified in the notice along with interest payable thereon under section 50 and a

penalty equivalent to the tax specified in the notice.

(2) The proper officer shall issue the notice under sub-section (1) at least six months

prior to the time limit specified in sub-section (10) for issuance of order.

(3) Where a notice has been issued for any period under sub-section (1), the proper

officer may serve a statement, containing the details of tax not paid or short paid or erroneously

refunded or input tax credit wrongly availed or utilised for such periods other than those

covered under sub-section (1), on the person chargeable with tax.

(4) The service of statement under sub-section (3) shall be deemed to be service of

notice under sub-section (1) of section 73, subject to the condition that the grounds relied

upon in the said statement, except the ground of fraud, or any wilful-misstatement or

suppression of facts to evade tax, for periods other than those covered under

sub-section (1) are the same as are mentioned in the earlier notice.

(5) The person chargeable with tax may, before service of notice under

sub-section (1), pay the amount of tax along with interest payable under section 50 and a

penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of

such tax or the tax as ascertained by the proper officer and inform the proper officer in writing

of such payment.
(6) The proper officer, on receipt of such information, shall not serve any notice under

sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of

this Act or the rules made thereunder.

(7) Where the proper officer is of the opinion that the amount paid under

sub-section (5) falls short of the amount actually payable, he shall proceed to issue the

notice as provided for in sub-section (1) in respect of such amount which falls short of the

amount actually payable.

(8) Where any person chargeable with tax under sub-section (1) pays the said tax

along with interest payable under section 50 and a penalty equivalent to twenty-five per cent.

of such tax within thirty days of issue of the notice, all proceedings in respect of the said

notice shall be deemed to be concluded.

(9) The proper officer shall, after considering the representation, if any, made by the

person chargeable with tax, determine the amount of tax, interest and penalty due from such

person and issue an order.

(10) The proper officer shall issue the order under sub-section (9) within a period of

five years from the due date for furnishing of annual return for the financial year to which the

tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five

years from the date of erroneous refund.

(11) Where any person served with an order issued under sub-section (9) pays the tax

along with interest payable thereon under section 50 and a penalty equivalent to fifty per

cent. of such tax within thirty days of communication of the order, all proceedings in respect

of the said notice shall be deemed to be concluded.

Explanation 1.— For the purposes of section 73 and this section,—

(i) the expression “all proceedings in respect of the said notice” shall not

include proceedings under section 132;
(ii) where the notice under the same proceedings is issued to the main

person liable to pay tax and some other persons, and such proceedings against

the main person have been concluded under section 73 or section 74, the

proceedings against all the persons liable to pay penalty under sections 122,

125, 129 and 130 are deemed to be concluded.

Explanation 2.––For the purposes of this Act, the expression “suppression”

shall mean non-declaration of facts or information which a taxable person is required to

declare in the return, statement, report or any other document furnished under this Act

or the rules made thereunder, or failure to furnish any information on being asked for,

in writing, by the proper officer.

The above information clarifies about Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts under section 74 of CGST Act,2017.

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