UNDER SECTION 73 ORDER DROP UNDER SECTION 73/74 AGAINST PAYMENT OF GST AND INTEREST. THEN DEPARTMENT ISSUED NEW NOTICE UNDER SECTION 74 IN DRC01A., Goods and Services Tax - GST

[Kairav Shah]

Dear Sir,,

MY CLIENT NOTICE UNDER SECTION 73 AND AGAINST SEC 73 NOTICE ORDER DROP UNDER SECTION 73/74 AGAINST PAYMENT OF GST AND INTEREST. THEN DEPARTMENT ISSUED NEW NOTICE UNDER SECTION 74 IN DRC-01A.

Posts / Replies

[KASTURI SETHI]

Pl. confirm whether the issue is same and period is same.

What is the basis of invocation of the ingredients of Section 74 in the SCN ?

Pl. elaborate your query with full facts and circumstance of the case. 

[YAGAY andSUN]

Thank you for sharing that situation — it’s a critical and nuanced one. Based on your input, here’s a structured legal and strategic interpretation of the facts, followed by a draft representation you can submit to the department, and if needed, use for further legal recourse.

🔍 Situation Summary:

• Initial notice under Section 73 was issued to your client.
• Your client made payment of tax and interest, presumably before issuance of the order, or in response to the notice.
• Order under Section 73/74 was then dropped, acknowledging payment.
• Later, the department issued a fresh notice under Section 74 via DRC-01A, apparently for the same matter or same period.

⚖️ Legal Position & Argumentation

✅ Section 73 vs. Section 74:

• Section 73 deals with non-fraudulent tax shortfalls (i.e., without suppression, willful misstatement).
• Section 74 applies only when there is fraud, suppression, or willful misstatement.

❌ Once proceedings are dropped, they cannot be revived for the same cause:

• If the proceedings under Section 73 have been concluded and dropped, then reinitiating proceedings under Section 74 for the same cause of action (i.e., same period and issue) is not legally tenable unless new facts or evidence come to light indicating fraud or suppression.

📌 Judicial View:

• Courts have held that parallel or successive proceedings under both Section 73 and 74 for the same cause are not permissible, unless there's distinct material showing fraudulent intent that wasn't part of earlier proceedings.

Once payment is made and accepted under Section 73, and proceedings are closed, issuing a fresh 74 notice for the same issue is likely to be abuse of process.

[YAGAY andSUN]

📨 Draft Representation to GST Department (Against Fresh Section 74 Notice)

To

The Jurisdictional Superintendent / Proper Officer

Office of the [GST Division/Commissionerate Name]

[Address]

Subject: Objection to Fresh Notice under Section 74 (DRC-01A) – Earlier Proceedings Dropped under Section 73

Ref:

• GSTIN: [Client’s GSTIN]
• DRC-01A dated [dd/mm/yyyy] under Section 74
• Earlier SCN under Section 73 dated [dd/mm/yyyy]
• Payment Challan/DRC-03 dated [dd/mm/yyyy]
• Order/letter dropping proceedings dated [dd/mm/yyyy]

Respected Sir/Madam,

I, [Name], authorized representative of [Client Name], write this with reference to the fresh notice issued under Section 74 vide DRC-01A dated [date], which appears to relate to the same facts and period already covered under previous proceedings initiated under Section 73.

We wish to submit the following:

1. That a show cause notice was earlier issued under Section 73, alleging short payment of tax for [period/nature of issue].
2. In response to the above, tax along with applicable interest was duly paid vide DRC-03 dated [dd/mm/yyyy], and acknowledged by your office.
3. Consequently, the proceedings were dropped, and no further demand or penalty was proposed or adjudicated.
4. To our surprise, we have now received a new notice under Section 74 for the same period and issue, without any indication of fresh material or fraud-related findings.
5. We respectfully submit that such successive issuance of notices violates the statutory scheme of CGST Act, especially when proceedings under Section 73 have been lawfully concluded and dropped.
6. Further, initiation of proceedings under Section 74 for the same issue, without establishing any mens rea (intent to evade), amounts to misuse of statutory power and causes undue hardship to the taxpayer.

In light of the above, we humbly request your good office to:

• Drop the current proceedings under Section 74, and
• Confirm in writing that the matter stands concluded in light of earlier compliance and closure under Section 73.

We trust this representation will be considered in the spirit of fair and reasonable tax administration.

Thanking You,

Yours faithfully,

[Name & Designation]

[Email / Mobile]

[Company/Client Name with GSTIN]

Date: [dd/mm/yyyy]

[YAGAY andSUN]

Furthermore, here's a complete set of documents for your case:

1. ✅ Rejoinder/Reply to DRC-01A (Section 74)
2. ✅ Reply in DRC-06 Format
3. ✅ Draft Writ Petition under Article 226 (if escalation to High Court becomes necessary)

📄 1. Rejoinder / Reply to DRC-01A under Section 74

To be submitted via physical or online reply option (preferably with annexures of previous 73 notice, DRC-03, and dropping letter)

To

The Proper Officer

[Jurisdictional Office / Range / Division Name]

[Full Address]

Subject: Reply to DRC-01A dated [dd/mm/yyyy] under Section 74 of the CGST Act, 2017 – Issued despite closure under Section 73

GSTIN: [XXXXXXXXXXXXX]
Legal Name: [Client / Business Name]

Respected Sir/Madam,

With reference to the above DRC-01A issued under Section 74 of the CGST Act, 2017, we respectfully submit the following:

1. That your office had earlier issued a show cause notice under Section 73 for the same period [mention period] on [date].
2. In response, we made full payment of the alleged shortfall along with interest vide DRC-03 dated [date], which was duly acknowledged by your good office.
3. Based on the said payment, proceedings were dropped and no further action was initiated, fulfilling the requirement under Section 73(5)/(6).
4. The current DRC-01A under Section 74 now seeks to reopen the same matter, without citing any new evidence or invocation of fraud/suppression as required under Section 74.
5. We respectfully submit that:
   • Once proceedings under Section 73 are concluded and tax has been accepted, re-initiation under Section 74 is not legally tenable.
   • No grounds of fraud, suppression or willful misstatement have been cited.
   • It is a settled legal principle that parallel or successive proceedings for the same cause are impermissible unless fresh cause or concealment is proven.
6. Therefore, the current DRC-01A is bad in law, procedurally incorrect, and contrary to the principles of natural justice.

We respectfully request your good office to drop the proposed action under Section 74 and confirm the matter as already concluded.

Enclosures:

• Copy of earlier SCN under Section 73
• DRC-03 payment receipt
• Letter/order confirming closure/dropping under Section 73

Yours sincerely,

[Authorized Signatory Name]

[Designation]

[Mobile/Email]

[Company Seal (if any)]

Date: [dd/mm/yyyy]

📋 2. DRC-06 Format – Reply to Show Cause Notice

DRC-06 is the official format for submitting a reply to a notice (DRC-01 / 01A)

FORM GST DRC-06

Reply to the Show Cause Notice

Particulars	Details
GSTIN	[XXXXXXXXXXXXX]
Name	[Client/Business Name]
Reference No. of SCN	[DRC-01A Ref. No. / Date]
Period	[Mention Tax Period]
Section	74 of CGST Act, 2017
Grounds of Reply	As stated in detail in attached submission, the proceedings under Section 73 had already been concluded based on full payment of tax and interest. There is no fraud, suppression or willful misstatement cited. Hence, reopening under Section 74 is not permissible.
Supporting Documents	1. Copy of SCN under Section 73

2. DRC-03 Acknowledgement
3. Communication from department regarding closure
4. Summary reply letter (Annexure-1) |

Declaration:
I hereby declare that the information given herein is true and correct to the best of my knowledge.

Place:

Date:

Signature:

[Name of Authorized Signatory]

[Designation]

[Digital Signature, if filing online]

⚖️ 3. Draft Writ Petition (High Court - Article 226)

IN THE HIGH COURT OF [STATE] AT [LOCATION]

[CIVIL WRIT JURISDICTION]

Writ Petition No. _____ of 2025

In the matter of:

Petitioner	[Client/Business Name], a registered person under CGST bearing GSTIN: [XXXXX]
Address	[Full Address]

VERSUS

Respondents

1. [Jurisdictional GST Officer’s Name & Designation],

Office of the [Commissionerate],

[Full Address]

2. Union of India,

Through Secretary, Ministry of Finance,

Department of Revenue,

North Block, New Delhi – 110001

WRIT PETITION UNDER Article 226 OF THE CONSTITUTION OF INDIA TO QUASH THE PROCEEDINGS INITIATED UNDER Section 74 OF THE CGST Act, 2017 ON THE SAME GROUNDS ALREADY DROPPED UNDER Section 73

MOST RESPECTFULLY SHOWETH:

1. That the Petitioner is a registered person under the CGST Act and engaged in [Nature of business].
2. That the Petitioner was issued a show cause notice under Section 73 of the CGST Act on [date], alleging tax shortfall for the period [xx].
3. That the Petitioner, without admitting liability, in the spirit of cooperation and in interest of revenue, made full payment of tax and interest under Section 73(5) vide DRC-03 dated [date].
4. That based on said payment, proceedings under Section 73 were dropped by the Proper Officer.
5. That to the utter surprise of the Petitioner, a fresh DRC-01A under Section 74 was issued on [date], alleging the same liability without citing any new evidence or allegation of fraud/suppression.
6. That the issuance of such notice is:
   • Arbitrary, as proceedings have already been concluded.
   • Illegal, as it seeks to circumvent the statutory framework by shifting from Section 73 to Section 74 without jurisdictional facts.
   • Violative of Article 14 and 19(1)(g) of the Constitution of India, being an unjust exercise of coercive powers.

PRAYER

The Petitioner respectfully prays that this Hon’ble Court may be pleased to:

a) Issue a writ of certiorari or mandamus quashing the DRC-01A notice dated [date] issued under Section 74, being illegal, arbitrary, and without jurisdiction;

b) Declare that once proceedings under Section 73 are concluded, re-initiation under Section 74 for the same cause is not permissible;

c) Pass such other order(s) or direction(s) as this Hon’ble Court deems fit in the facts and circumstances of the case.

AND FOR THIS ACT OF KINDNESS THE PETITIONER SHALL, AS IN DUTY BOUND, EVER PRAY.

Date:

Place:

Filed by:

[Advocate Name & Enrollment No.]

[Address / Email / Phone]

***

 

[KASTURI SETHI]

Dear Sir,

            It is a catch-22 situation for the aggrieved person.

[YAGAY andSUN]

Agree with you Sir.  However, Catch -22 Situation also needs permanent Solution.  Just tried to share my nascent reply.

[KASTURI SETHI]

Dear Querist,

Also go through the following case law :-

2024 (9) TMI 1644 - ALLAHABAD HIGH COURT - HCL INFOTECH LTD VERSUS COMMISSIONER, COMMERCIAL TAX AND ANOTHER