Demand in case other than fraud or any wilful-misstatement or suppression of facts pertaining to the period up to Financial Year 2023-24 [Section 73] - GST Ready Reckoner - GST

Demand in case other than fraud or any wilful-misstatement or suppression of facts pertaining to the period up to Financial Year 2023-24 Issue of show cause notice Section 73(1) of CGST Act : 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 Time limit for issuance of SCN [ Section 73(2), (10)] Time limit for issuing SCN:- The proper officer shall issue the notice under section 73(1) at least three months prior to serving order. [section 73(2)] Time limit for issuance of Adjudication order :- As per section 73(10) time limit is 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. Extension of time limit specified u/s 73(10) for issuance of order u/s 73(9):- 1. Notification No. 09 / 2023 Central tax notifies for the Extension of time limit for recovery of tax in in case other than fraud or any wilful-misstatement or suppression of facts namely: for the financial year 2017-18, up to the 31st day of December, 2023 ; for the financial year 2018-19, up to the 31st day of March, 2024 ; up to the 30th day of April, 2024 amended by Notification No. 56/2023- Central Tax Dated 28/12/2023. for the financial year 2019-20, up to the 30th day of June, 2024 up to the 31st day of August, 2024 amended by Notification No. 56/2023- Central Tax Dated 28/12/2023. No need to serve the SCN [Section 73(3) (4)] Already issued SCN for any other period:- 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. 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. Statement by Proper officer to serve as Deemed Notice [ Section 73(3) ] Where a notice has been issued for any period under section 73(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 on the person chargeable with tax. Section 73(4) The service of such statement shall be deemed to be service of notice on such person chargeable with tax, on the same grounds as stated in earlier notice.(i.e. as show cause notice). Payment of tax before issue of SCN [Section 73(5), (6), (7)] [Voluntary Payment] Interest on tax always paid whether specified or not in demand order As Per section 73(5) In case of payment of 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. No Notice in case of payment of amount due Section 74(6 ) states that the proper officer, on receipt of such information, shall not serve any notice in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. Consequences leading to notice in case of short payment Howsoever as Per Section 73(7) Where the proper officer is of the opinion that the amount paid under section 73(5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in section 73(1) in respect of such amount which falls short of the amount actually payable. No Penalty In case of due payment within 30 days of show cause notice Section 73(8) Where any person chargeable with tax 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. Adjudication order [Section 73(9) (11)] Mandatory to pay Penalty in following case [ Section 73(11) ] Notwithstanding anything contained in section 73(6) (8) and; provides for the penalty under section 73(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. Determination of penalty Section 73(9) The proper officer shall issue a order and impose the penalty equivalent to, a) 10% of tax or b) Rs. 10,000/- Whichever is higher Non-applicability of the provision of Section 73 [ Section 73(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 ] Proper officer under sections 73 and 74 of the Central Goods and Services Tax Act, 2017 and under the Integrated Goods and Services Tax Act. [ See Circular No. 31/05/2018 - GST dated 09.02.2018 ] Clarification on various issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices. [ See Circular No. 171/03/2022-GST dated 06.07.2022 ] In case where a registered person A has issued tax invoice to another registered person B without any underlying supply of goods or services or both, whether such transaction will be covered as supply under section 7 of CGST Act and whether any demand and recovery can be made from A in respect of the said transaction under the provisions of section 73 or section 74 of CGST Act . . Also, whether any penal action can be taken against registered person A in such cases. A registered person A has issued tax invoice to another registered person B without any underlying supply of goods or services or both. B avails input tax credit on the basis of the said tax invoice. B further issues invoice along with underlying supply of goods or services or both to his buyers and utilizes ITC availed on the basis of the above mentioned invoices issued by A , for payment of his tax liability in respect of his said outward supplies. Whether B will be liable for the demand and recovery of the said ITC, along with penal action, under the provisions of section 73 or section 74 or any other provisions of the CGST Act. A registered person A has issued tax invoice to another registered person B without any underlying supply of goods or services or both. B avails input tax credit on the basis of the said tax invoice and further passes on the said input tax credit to another registered person C by issuing invoices without underlying supply of goods or services or both. Whether B will be liable for the demand and recovery and penal action, under the provisions of section 73 or section 74 or any other provisions of the CGST Act. Clarification on where some of the taxpayers after voluntarily depositing GST liability through DRC-03 have alleged use of force and coercion by the officers for making recovery during the course of search or inspection or investigation. [ See Instruction No. 01/2022-23 [GST Investigation] dated 25.05.2022 ] Clarification regarding Whether penalty in accordance with section 73(11) of the CGST Act should be levied in cases where the return in FORM GSTR-3B has been filed after the due date of filing such return? [ Circular No. 76/50/2018-GST Dated 31st December, 2018 ]