Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onward [ Section 74A ] - GST Ready Reckoner - GST

Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onward [ Section 74A (w.e.f. 01.11.2024 vide N.No. 01.11.2024 dated 27.09.2024) ] [ Inserted vide Finance (No. 2) Act, 2024 ] When Show cause notice to be issue [ Section 74A(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, 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. Contain of Show cause Why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and A penalty leviable under the provisions of this Act or the rules made thereunder. No notice shall be issued , if the tax which has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised in a financial year is less than ₹ 1,000/-. Time limit for issuing show cause notice u/s 74A(1) The proper officer shall issue the notice within 42 months 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 42 months from the date of erroneous refund. [ Section 74A(2) ] Where a notice has been issued for any period , 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 u/s 74A(1), on the person chargeable with tax. [ Section 74A(3) ] Conditions for Effective Notice Service and Consistency of Grounds [ Section 74A(4) ] The service of such statement shall be deemed to be service of notice on such person u/s 74A(1), subject to the condition that the grounds relied upon for such tax periods other than those covered u/s 74A(1) are the same as are mentioned in the earlier notice. Penalties for Non-Payment, Short Payment, Erroneous Refund, and Misuse of Input Tax Credit [ Section 74A(5) ] The penalty in case where any tax which has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, (i) for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, shall be equivalent to ten per cent. of tax due from such person or ten thousand rupees, whichever is higher; (ii) for the reason of fraud or any wilful-misstatement or suppression of facts to evade tax shall be equivalent to the tax due from such person. Determination of Tax, Interest, and Penalty by Proper Officer [ Section 74A(6) ] 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. Time limit for issuing Order [ Section 74A(7) ] The proper officer shall issue the order under section 74A(6) within twelve months from the date of issuance of notice specified in section 74A(2). Authority and Procedure for Extending the Order Issuance Period - Where the proper officer is not able to issue the order within the specified period, the Commissioner, or an officer authorised by the Commissioner senior in rank to the proper officer but not below the rank of Joint Commissioner of Central Tax, may, having regard to the reasons for delay in issuance of the order u/s 74A(6), to be recorded in writing, before the expiry of the specified period, extend the said period further by a maximum of six months. Procedures for Voluntary Tax Payment and Penalty waiver in case of other than reason Fraud or wilful-misstatement or suppression [ Section 74A(8) ] The person chargeable with tax where any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax , may, (i) before service of notice u/s 74A(1) , pay the amount of tax along with interest payable under section 50 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, and the proper officer, on receipt of such information shall not serve any notice u/s 74A(1) or the statement u/s 74A(3), as the case may be, in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder; (ii) After service of notice u/s 74A(1) - pay the said tax along with interest payable under section 50 within sixty days of issue of show cause notice, and on doing so, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded. Procedures of Tax Payment and Penalty in case of Fraud or wilful-misstatement or suppression [ Section 74A(9) ] The person chargeable with tax, where 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, may, (i) Payment made before service of notice u/s 74A(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, and the proper officer, on receipt of such information, shall not serve any notice u/s 74A(1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder; (ii) Payment after service of notice u/s 74A(1) but before 60 days - pay the said tax along with interest payable u/s 50 and a penalty equivalent to 25% of such tax within sixty days of issue of the notice, and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded; (iii) Payment a fter service of notice u/s 74A(1) but after 60 days pay the tax along with interest payable thereon u/s 50 and a penalty equivalent to 50% of such tax within sixty days of communication of the order, and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded. Action on Shortfall in Tax Payment: Issuance of Notice [ Section 74A(10) ] Where the proper officer is of the opinion that the amount paid under clause (i) of u/s 74A(8) or clause (i) of u/s 74A(9) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in u/s 74A(1) in respect of such amount which falls short of the amount actually payable. Penalty for Failure to Pay Self-Assessed or Collected Tax Within 30 Days [ Section 74A(11) ] Notwithstanding anything contained in clause (i) or clause (ii) of u/s 74A(8), penalty under clause (i) of u/s 74A(5) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax. Applicability of the this Section [ Section 74A(12) ] The provisions of this section shall be applicable for determination of tax pertaining to the Financial Year 2024-25 onwards. For the purposes of 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 this section, the proceedings against all the persons liable to pay penalty under sections 122 and 125 are deemed to be concluded. [ Explanation 1 to section 74A ]