Demand by reason of fraud or any wilfull-misstatement or suppression of facts pertaining to the period up to Financial Year 2023-24 [Section 74] - GST Ready Reckoner - GST

Demand by reason of fraud or any wilfull-misstatement or suppression of facts pertaining to the period up to Financial Year 2023-24 Issue of Show cause Notice [ Section 74(1) ] In cases where the provisions related to fraud/suppression/mis-statement etc. are invoked. The Section stipulates that where it appears to the proper officer that by reason of fraud/mis-statement/ suppression of facts to evade tax, tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for, the proper officer shall issue a show cause notice(SCN) as to why the amount of tax should not be paid alongwith interest and penalty leviable thereon under the provisions of this Act and rules made thereunder. 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. (w.e.f. 01.11.2024 vide N.No. 17/2024 dated 27.09.2024) [ Omitted vide Finance (No.2) Act, 2024 ] Time limit for issue Of order [Section 74(2), (3) (4) read with Section 74(10)] Time limit to issue SCN The SCN is required to be issued at least six months prior to the time limit set for adjudication order. Time Limit to issue Adjudicating order The SCN has to be adjudicated within at period of five years from the due date of filing of annual return for the financial year to which the tax not paid/short paid/ITC wrongly availed or utilised relates to or within five years from the date of erroneous refund. The adjudication proceeding shall be deemed to be concluded, if the order is not issued within 5 year as provided in section 74(10). Deemed to be SCN issued [Section 74(3) (4)] Where a notice has been issued for any period on a person chargable with tax and same default in some other period also, instead of issuing a detailed notice, a mere 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 can issued. [Section 74(3)] The service of such statement shall be deemed to be service of notice on such person under section 73(1), 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 such tax periods, other than those covered under section 74(1) are the same as are mentioned in the earlier notice. [Section 74(4)] Penalty leviable if proceeding initiated under section 74 Voluntary payment before issuance of notice [ section 74(5 )] The noticee liable to pay tax chargeable along with interest as per section 50 and Penalty equal to 15% of tax chargeable such demand may be as ascertained either on his own or ascertained by the proper officer, and on such payment, no notice shall be issued with respect to the tax so paid. The proper officer is of the opinion that the amount paid is falls short of the amount actually payable, he shall proceed to issue the notice in respect of such amount which falls short of the amount actually payable. and Penalty determined as according to provision mentioned under section 74(8) of CGST Act. In case SCN issued [ Section 74(8) ] If make payment within 30 day of communication of SCN the noticee makes payment of tax along with interest and with penalty equal to 25% of such tax, all proceedings in respect of such notice shall be deemed to be concluded. If does make payment after 30 day of communicated order then penalty determine as per section 74(11) of CGST Act. In case SCN issued and adjudication order is issued [ Section 74(11) ] If make payment within 30 day of communication of adjudicating order the noticee makes payment of tax along with interest and with penalty equal to 50% of such tax all proceedings in respect of such notice shall be deemed to be concluded. In case make payment of demand order after 30 days of communication of adjudicating order the noticee makes payment of tax along with interest and with penalty equal to 50 % of such tax within 30 days of communicate of notice Non-applicability of the provision of Section 73 [ Section 74(12) (w.e.f. 01.11.2024 vide N.No. 17/2024 dated 27.09.2024) [ Inserted vide Finance (No.2) Act, 2024 ] The provisions of this section shall be applicable for determination of tax pertaining to the period up to Financial Year 2023-24 Procedure for issue of Notice and order for demand of amounts payable under the Act to be read in reference to Rule 142 Important Notification Circular Central Government, notifies the special procedure for rectification of for Input Tax Credit Orders issued under Section 73, 74, 107, 108 which confirming demand for wrong availment of input tax credit. [ Notification No. 22/2024 - Central Tax dated 08.10.2024 ]