SECTION 74 OF THE CGST ACT ALONG WITH RELEVANT RULES THERE ON

Section 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 willful- misstatement or suppression of facts.-

(1) Proper office has evidence of tax not paid or input wrongly claimed:

Ø  Where it appears to the proper officer that

Ø  any tax - not paid / short paid / erroneously refunded

Ø  or input tax credit - wrongly availed / utilised

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

Ø  he shall serve notice on the person

Ø  requiring him to show cause

Ø  as to why he should not pay the amount specified in the notice along with interest and penalty.

(2) Time limit to issue notice:

Ø  The proper officer

Ø  shall issue the notice

Ø  at least six months prior to issuance of order.

(3) Officer may serve statement for other periods also:

Ø  A notice has been issued for any period

Ø  the proper officer may serve a statement,

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

(4) Statement is deemed notice:

Ø  The service of statement under sub-section (3) shall be deemed to be service of notice.

(5) The person may pay tax + interest before service of notice:

Ø  The person may,

Ø  before service of notice

Ø  pay the amount of tax + interest + penalty (50%)

Ø  on his own ascertainment of such tax

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

(6) If tax + interest paid then officer shall not issue notice:

Ø  The proper officer, on receipt of such information, shall not serve any notice.

(7) If officer is of the opinion that tax + interest paid are short then he shall issue notice:

Ø  officer is of the opinion that

Ø  the amount paid falls short

Ø  he shall proceed to issue the notice of such amount which falls short.

(8) If tax + int + penalty paid within 30 days of notice:

Ø  Person pays said tax + interest + penalty (25%)

Ø  within thirty days of issue of the notice,

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

(9) Officer must consider Representation by person before issue of order:

Ø  The proper officer shall,

Ø  after considering the representation,

Ø  determine the amount of tax, interest and penalty

Ø  and issue an order.

(10) time limit to issue order:

Ø  The proper officer shall

Ø  issue the order under

Ø  within a period of five years

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

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

(11) If tax + int + penalty paid within 30 days of order:

Ø  Where any person served with an order

Ø  pays the tax + interest + penalty (50%)

Ø  within thirty days of communication of the order,

Ø  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 ¹[sections 122 and 125] 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.

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

1. Substituted (w.e.f. 1st January, 2022 vide Notification No. 39/2021-C.T., dated 21st December, 2021) by s. 113 of The Finance Act, 2021 (No. 13 of 2021) dated 28th March, 2021 for "sections 122, 125, 129 and 130".

 

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

(1) Form of Notice and statement

Ø  The proper officer shall serve, along with the

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

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

Ø  specifying therein the details of the amount payable.

(1A) DRC01A before issue of notice:

Ø  proper officer may

Ø  before service of Notice

Ø  communicate the details of any tax + interest + penalty in Part A of FORM GST DRC-01A

(2) DRC03 – if payment made be person on his own ascertainment:

Ø  Where, before the service of Notice or statement,

Ø  the person makes payment of the tax + interest + penalty

Ø  on his own ascertainment or, as communicated by the proper officer under sub-rule (1A)

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

²[(2A) Part B of FORM GST DRC-01A – for submissions or reply

Ø  Where the person 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)

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

Ø  within thirty days of the service of a Notice

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 

Ø  concluding the proceedings in respect of the said Notice.

(4) DRC 06 – representation or reply to the notice:

Ø  The representation or the reply to any Notice

Ø  shall be furnished in FORM GST DRC-06

(5) DRC 07 – format of 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) Order is notice for recovery:

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

(7) DRC 08 – rectification or withdrawal of order:

Ø  Where a rectification order has been passed or an order withdrawn,

Ø  a summary of rectification or withdrawal shall be uploaded electronically FORM GST DRC-08

 

Section 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 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 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 subsection (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 ¹[sections 122 and 125] 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.

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

1. Substituted (w.e.f. 1st January, 2022 vide Notification No. 39/2021-C.T., dated 21st December, 2021) by s. 113 of The Finance Act, 2021 (No. 13 of 2021) dated 28th March, 2021 for "sections 122, 125, 129 and 130".

 

 

 

Rule 53. Revised tax invoice and credit or debit notes.-

(3) Any invoice or debit note issued in pursuance of any tax payable in accordance with the provisions of section 74 shall prominently contain the words "INPUT TAX CREDIT NOT ADMISSIBLE".

Rule 121. Recovery of credit wrongly availed.-

The amount credited under sub-rule (3) of rule 117 (TRANS-1) may be verified and proceedings under section 73 or, as the case may be, section 74 shall be initiated in respect of any credit wrongly availed, whether wholly or partly.

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.