26/05/2025
Provisions of Section 74A of the CGST Act
Here are the details about the provisions of Section 74A of the CGST Act.
Sections
General Cases
Cases involving Fraud or Wilful Misstatement
Section 74A(1) - Demand Notice Issuance
The proper officer can serve demand notice (for tax and interest u/s 50) to the taxpayer in the following cases only if the demand amount is more than Rs. 1,000 for a financial year:
Tax not paid
Tax short-paid
Tax erroneously refunded
ITC wrongly availed or utilised
Section 74A(2) - Time Limit for issuing notices
The notice should be served within 42 months of:
Due date of filing annual return for the financial year or
The date of the erroneous refund
Section 74A(3) - Issuance of Statement
The proper officer may issue a statement containing details of the tax demand for periods other than those covered in the notice under Section 74A(1).
Section 74A(4) - Condition for Deemed Notice
The statement issued u/s 74A(3) will be considered as deemed notice if the grounds of default are the same as covered by the notice u/s 74A(1).
Section 74A(5) - Penalty
74A(5)(i) - 10% of the tax due or Rs. 10,000, whichever is higher. 74A(5)(ii) - Equivalent to the amount of tax due.
Section 74A(6)—Determination of Demand
After listening to the taxpayer's representation, the proper officer determines the amount of tax, interest, and penalty and issues an order.
Section 74A(7) - The time limit for issuing the order
Order under Section 74A(6) should be issued within 12 months from the notice issuance date. This period can be extended by a maximum of 6 months with approval.
Section 74A(8) & (9) - Voluntary Payment
8(i) Before Notice: No notice or penalty is charged if tax and interest are paid before notice and informed to the officer.
8(ii) Within 60 days of Notice: No penalty is charged for tax and interest paid within 60 days of notice.
9(i) Before Notice: No notice is served if the taxpayer pays tax + interest + penalty @ 15% of tax before the notice and the officer is informed:
9(ii) Within 60 days of Notice: No further proceedings are carried on if tax + interest + 25% penalty of tax is paid within 60 days of notice.
9(iii) Within 60 days of Order: No further proceedings are carried out if tax + interest + 50% penalty on tax is paid within 60 days of the order.
Section 74A(10) - Shortfall in Payment
If the amount paid u/s 74A(8)(i) is less than the payable amount, notice for the shortfall will be served in the due course. If the amount paid u/s 74A(9)(i) is less than the payable amount, notice for the shortfall will be served in the due course.
Section 74A(11) - Shortfall in Payment
Overriding all other clauses of Section 74A(8), the penalty will be charged if the tax collected or self-assessed tax is not paid within 30 days from the due date of tax payment. Not Applicable
Section 74A(12) - Applicability
Section 74A is applicable from Financial Year 2024-25 onwards.
