SECTION 73 OF THE CGST ACT 2017 ALONGWITH RULES THERE ON

Section 73. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-

(1)     Proper officer has reason to believe:

Ø  it appears to the proper officer that

Ø  tax - not paid / short paid / erroneously refunded

Ø  input - wrongly availed / utilised

Ø  any reason other than fraud / wilful-misstatement / suppression of facts to evade tax,

Ø  proper officer he shall serve notice

Ø  requiring registered person to show cause why he should not pay the amount specified in the notice along with interest and penalty.

Ø  Notice must contain amount of tax/interest/penalty

(2)     Period to issue notice:

Ø  at least three months prior to the issuance of order under sub section (10).

(3)     Proper officer may serve statement:

Ø  Where a notice issued under sub-section (1),

Ø  the proper officer may serve a statement,

Ø  containing the details of tax or input tax credit

Ø  for such periods other than those covered under sub-section (1),

Ø  on the person chargeable with tax.

(4)     Statement is deemed notice under sub-section (1):

Ø  service statement shall be deemed to be service of notice under sub-section (1)

(5)     The person may pay tax/interest on their own:

Ø  The person may pay tax, interest;

Ø  before service of notice;

Ø  and inform the proper officer in writing of such payment.

(6)     No notice if voluntary paid before notice issued:

Ø  If tax/interest paid and informed to officer under sub-section (5);

Ø  The proper officer, shall not serve any notice.

(7)     Proper office may issue notice for short amount of tax if any:

Ø  Where the proper officer is of the opinion that

Ø  the amount paid under sub-section (5) falls short of the amount actually payable,

Ø  he shall proceed to issue the notice

Ø  amount which falls short of the amount actually payable.

(8)     No penalty if tax and interest paid within 30 days of notice:

Ø  If tax and interest paid within 30 days of issue of show cause notice;

Ø  no penalty shall be payable

Ø  all proceedings in respect of the said notice shall be deemed to be concluded.

(9)     Issue of order:

Ø  The proper officer shall,

Ø  after considering the representation,

Ø  determine the amount of tax / interest / penalty (equal 10% or 1000, w.e. is higher)

Ø  And issue an order.

(10)  Due Date of issue of order:

Ø  The proper officer shall

Ø  issue the order under sub-section (9)

Ø  within three years

Ø  from the due date of annual return for financial year to which tax or input tax relates to

Ø  or within three years from the date of erroneous refund.

(11)  Penalty payable if tax/interest not paid within 30 days of notice to pay:

Ø  Notwithstanding anything contained in sub-section (6) or sub-section (8),

Ø  penalty under sub-section (9) shall be payable

Ø  where any amount of self-assessed tax or any amount collected as tax

Ø  has not been paid within a period of thirty days from the due date of payment of such tax.

Rule 142. Notice and order for demand of amounts payable under the Act. -

(1) Proper office shall issue notice and summary electronically:

Ø  The proper officer shall serve, along with the

Ø  (a) Notice and a summary thereof electronically in FORM GST DRC-01,

Ø  (b) statement and a summary thereof electronically in FORM GST DRC-02, 

Ø  specifying therein the details of the amount payable.

(1A) Before service notice – communicate details of tax / interest / penalty:

Ø  proper officer may

Ø  before service of Notice

Ø  communicate the details of any tax, interest and penalty

Ø  as ascertained by the said officer,

Ø  in Part A of FORM GST DRC-01A

(2) If registered person pays tax/int/penalty on their own then inform proper officer:

Ø  Where, before the service of Notice or statement,

Ø  the person makes payment of the tax / interest

Ø  he shall inform the proper officer of such payment in FORM GST DRC-03 

Ø  the proper officer shall issue an acknowledgement in FORM GST DRC-04

(2A) Registered person may make submissions against communication under subrule (1A):

Ø  Where the person referred to in sub-rule (1A)

Ø  has made partial payment of the amount

Ø  or desires to file any submissions against the proposed liability,

Ø  he may make such submission in Part B of FORM GST DRC-01A

(3) If payment of tax made within 30 days:

Ø  Where the person makes payment of tax / interest / penalty

Ø  he shall intimate the proper officer of such payment in FORM GST DRC-03 

Ø  proper officer shall issue an order in FORM GST DRC-05 concluding the proceedings in respect of the said Notice.

(4) Format for representation or reply to notice under sub-rule (1)

Ø  The representation referred to in sub-section (9) of section 73 

Ø  or the reply to any Notice issued under sub-rule (1)

Ø  shall be furnished in FORM GST DRC-06

(5) Details to mention in Order:

Ø  A summary of the order issued

Ø  shall be uploaded electronically in FORM GST DRC-07,

Ø  specifying therein the amount of tax, interest and penalty.

(6) The order referred to in sub-rule (5) shall be treated as the Notice for recovery.

(7) Rectification of order:

Ø  Where a rectification of the order has been passed or where an order uploaded on the system has been withdrawn,

Ø  a summary of the rectification order or of the withdrawal order

Ø  shall be uploaded electronically by the proper officer in FORM GST DRC-08

 

 

Section 73. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-

(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 for any reason, other than the 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 leviable under the provisions of this Act or the rules made thereunder.

(2) The proper officer shall issue the notice under sub-section (1) at least three 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 such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax 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 subsection (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 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) or, as the case may be, the statement under sub-section (3), 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) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and 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 person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.

**(10) The proper officer shall issue the order under sub-section (9) within three 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 three years from the date of erroneous refund.

(11) Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (9) 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.

*Enforced w.e.f. 1st July, 2017.

** Kindly also refer to Notification No. 13/2022  Central Tax dated 5^th Jul, 2022 (w.e.f. 01.03.2020).

[Rule 142. Notice and order for demand of amounts payable under the Act. -

(1) The proper officer shall serve, along with the

(a) Notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01 ,

(b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary thereof electronically in FORM GST DRC-02 , specifying therein the details of the amount payable.

²[(1A) The ³[proper officer may], before service of Notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as the case may be, ⁴[communicate] the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A.];

(2) Where, before the service of Notice or statement, the person chargeable with tax makes payment of the tax and interest in accordance with the provisions of sub-section (5) of section 73 or, as the case may be, tax, interest and penalty in accordance with the provisions of subsection (5) of section 74, or where any person makes payment of tax, interest, penalty or any other amount due in accordance with the provisions of the Act ²[whether on his own ascertainment or, as communicated by the proper officer under sub-rule (1A),] he shall inform the proper officer of such payment in FORM GST DRC-03 and the proper officer shall issue an acknowledgement, accepting the payment made by the said person in FORM GST DRC-04 .

²[(2A) Where the person referred to in sub-rule (1A) has made partial payment of the amount communicated to him or desires to file any submissions against the proposed liability, he may make such submission in Part B of FORM GST DRC-01A. ]

(3) Where the person chargeable with tax makes payment of tax and interest under sub-section (8) of section 73 or, as the case may be, tax, interest and penalty under sub-section (8) of section 74 within thirty days of the service of a Notice under sub-rule (1), or where the person concerned makes payment of the amount referred to in sub-section (1) of section 129 within ⁵[seven days of the notice issued under sub-section (3) of Section 129 but before the issuance of order under the said sub-section (3)], he shall intimate the proper officer of such payment in FORM GST DRC-03 and the proper officer shall issue an order in FORM GST DRC-05 concluding the proceedings in respect of the said Notice.

(4) The representation referred to in sub-section (9) of section 73 or sub-section (9) of section 74 or sub-section (3) of section 76 or the reply to any Notice issued under any section whose summary has been uploaded electronically in FORM GST DRC-01 under sub-rule (1) shall be furnished in FORM GST DRC-06 .

(5) A summary of the order issued under section 52 or section 62 or section 63 or section 64 or section 73 or section 74 or section 75 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 shall be uploaded electronically in FORM GST DRC-07, specifying therein the amount of ⁶[tax, interest and penalty, as the case may be, payable by the person concerned].

(6) The order referred to in sub-rule (5) shall be treated as the Notice for recovery.

(7) Where a rectification of the order has been passed in accordance with the provisions of section 161 or where an order uploaded on the system has been withdrawn, a summary of the rectification order or of the withdrawal order shall be uploaded electronically by the proper officer in FORM GST DRC-08.]

  Section 161. Rectification of errors apparent on the face of record.-

Without prejudice to the provisions of section 160, and notwithstanding anything contained in any other provisions of this Act, any authority, who has passed or issued any decision or order or notice or certificate or any other document, may rectify any error which is apparent on the face of record in such decision or order or notice or certificate or any other document, either on its own motion or where such error is brought to its notice by any officer appointed under this Act or an officer appointed under the State Goods and Services Tax Act or an officer appointed under the Union Territory Goods and Services Tax Act or by the affected person within a period of three months from the date of issue of such decision or order or notice or certificate or any other document, as the case may be:

Provided that no such rectification shall be done after a period of six months from the date of issue of such decision or order or notice or certificate or any other document:

Provided further that the said period of six months shall not apply in such cases where the rectification is purely in the nature of correction of a clerical or arithmetical error, arising from any accidental slip or omission:

Provided also that where such rectification adversely affects any person, the principles of natural justice shall be followed by the authority carrying out such rectification.