Section 74 of the CGST Act, 2017, deals with the determination of tax, interest, and penalties when tax has not been paid, short-paid, erroneously refunded, or Input Tax Credit (ITC) wrongly availed due to fraud, willful misstatement, or suppression of facts to evade tax. It empowers officers to issue Show Cause Notices (SCNs) with higher, stricter penalties than Section 73.
Section 74. *Section 74. Determination of tax 2[, pertaining to the period up to Financial Year 2023-24,] 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.-
2. Section 74: Demand Notice for Fraud Cases. This section covers cases where there is fraud, suppression, or misrepresentation of facts. – Time limit to issue notice: 5 years from the due date of filing annual return.
While Section 73 deals with issues without fraud or wilful misstatement, Section 74 handles cases where fraud, suppression, or intent to evade tax is alleged. The section invoked can drastically change the penalty exposure, the timeline for adjudication, and the overall risk profile for the taxpayer.
Section 73 applies to any tax liability when there is no suspicion of fraud, wilful misstatement or suppression of facts. Section 74 applies to a tax liability only when there is a suspicion of fraud, wilful misstatement or suppression of facts.
Tax authorities invoke Section 74 when they detect specific fraudulent patterns in your GST compliance: Intentional Non-payment of GST – Collecting tax from customers but not depositing it with the government.
The following category of tax persons are exempted from payment of 1% of GST in Cash 1. Registered taxpayers who have paid income tax above Rs 1.00 in Income Tax during the last two years continuously 2. Taxpayers who have zero-rated supplies without payment of duty and claimed refund of more than Rs 1.00 lac 3.
An offender not paying tax or making short payments must pay a penalty of 10% of the tax amount due subject to a minimum of Rs. 10,000. Consider — in case tax has not been paid or a short payment is made, a minimum penalty of Rs 10,000 has to be paid. The maximum penalty is 10% of the tax unpaid.
Whoever assaults or uses criminal force to any woman, intending to outrage or knowing it to be likely that he will there by outrage her modesty, shall be punished with imprisonment of either description for a term which shall not be less than one year but which may extend to five years, and shall also be liable to fine ...
Time Limit for Adjudication under GST
The GST law sets deadlines for when orders must be passed: Section 73 (No fraud): Order within 3 years from the due date of the annual return. Section 74 (Fraud cases): Order within 5 years. Once you file your reply, the officer should ideally pass an order within 3 months.
In case, the applicant does not reply to the notice within the stipulated time or the Tax Official is not satisfied with the reply filed by the applicant, he may proceed further to issue Refund Rejection/ Sanction Order in Form GST RFD-06 for sanctioning/rejecting the amount of refund in whole or part.
The commonalities between all three factors of Section 74 is judging the intention of the taxpayer by whom the mistake is made. Hence, the intention behind the mistake/error of the taxpayer, identifies the provisions under which the show cause notice is issued and gives a character to the taxpayer.
Section 16(2) and Rule 37
If he made proportionate payment to supplier with GST within 180 days then he has to reverse ITC proportionately . If No payment is made within 180 days, then whole the ITC has to be reversed. When the payment is made to the supplier ITC reversed will be reclaimed .
Section 74 of the CGST Act penalty
A penalty of 15% - if the taxpayer, before receiving the DRC-01, makes full payment of tax demand and interests charged on the tax dues. A penalty of 25% - if the taxpayer, upon receiving the DRC-01, makes full payment within 30 days of the notice's issuance.
Where a pre-show cause notice consultation is issued in Form GST DRC-01A, the person can submit a reply, or intimate about his payment in respect of the same, or both in Part-B of Form GST DRC-01A.
Section 73 of the Contract Act pertains specifically to liquidated damages, which are predetermined amounts agreed upon by the party at the time of the contract. Section 74 deals with unliquidated damages, addressing situations where the parties have not predetermined the compensation in the event of a breach.
Section 74 of the Central Goods and Services Tax (CGST) Act, 2017 deals with tax evasion involving fraud, willful misstatement, or suppression of facts. If such intent is present, the law allows: Higher penalties (up to 100% of tax) Extended limitation period (5 years from relevant date)
A written agreement under section 74 SA 2020 must be authorised by a Deputy Chief Crown Prosecutor, Deputy Head of Division or above. An offender who receives a discounted sentence based on assistance they have agreed to provide, who then does not do so, may have their sentence reviewed: section 387 SA 2020.
Legal Waivers/Reductions: Sections 73 and 74 of the CGST Act give discretionary powers to the authorities to waive penalty in case the tax payable is paid before assessment, or the default was not intentional and due to real causes.
If you miss the filing deadline and owe GST, the CRA will charge: Late Filing Penalty: 1% of the amount owing, plus 0.25% of the amount owing for each full month your return is late (up to 12 months).
The GST rates in India have been simplified to three main slabs: 5%, 18%, and 40%. The 5% rate applies to essentials and common household goods, the 18% rate is the new standard for most consumer products and services, and the 40% rate is for luxury and "sin" goods.
The New GST Rate Structure
The old four-slab structure (5%, 12%, 18%, 28%) has been simplified. The 12% and 28% slabs were eliminated and replaced with a new structure, which is now primarily 0%, 5%, 18%, and a 40% rate for luxury and “sin” goods.
There are really only two circumstances where customers are exempt from paying GST. The first is if it falls under the basic exemptions such as basic food, sales at duty-free and some medicines for example. The other circumstance is when a business is small enough that they don't have to register for GST credits.
Businesses are required to register for GST and pay tax on their annual turnover if their annual revenue exceeds Rs. 40 lakhs in the case of goods supplied and Rs. 20 lakhs for the supply of services.