Section 73 of CGST Act: Determination of Non-Fraud GST Demand up to FY 2023-24
Section 73 of the Central Goods and Services Tax Act, 2017 governs determination of tax not paid or short paid, erroneous refunds, and input tax credit wrongly availed or utilised for reasons other than fraud, wilful misstatement or suppression of facts, for periods up to Financial Year 2023-24.
Meaning and scope of Section 73
Section 73 is the demand and adjudication provision for non-fraud cases relating to periods up to FY 2023-24. It may apply where tax has not been paid, has been short paid, an erroneous refund has been granted, or input tax credit has been wrongly availed or utilised, provided the case is not founded on fraud, wilful misstatement or suppression of facts to evade tax.
The expression proper officer is defined in Section 2 of the CGST Act. Interest on delayed payment of tax is governed by Section 50. General safeguards and rules governing determination of tax are contained in Section 75.
Section 73 - Statutory provision
73. Determination of tax, 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 for any reason other than fraud or any wilful-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 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, 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 leviable under the provisions of this Act or the rules made thereunder.
(2) The proper officer shall issue the notice under sub-section (1) at least three 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 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.
(5) The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the 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.
(6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), 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) or sub-section (3) 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.
(9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.
(10) The proper officer shall issue the order under sub-section (9) 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.
(11) Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (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.
(12) The provisions of this section shall be applicable for determination of tax pertaining to the period up to Financial Year 2023-24.
Procedure, payment and penalty under Section 73
| Stage | Section 73 position |
|---|---|
| Before show cause notice | Taxpayer may pay tax with applicable interest and inform the proper officer. Subject to the statutory conditions, notice is not served for the amount so paid. |
| Within 30 days of show cause notice | Payment of tax and applicable interest concludes proceedings in respect of the notice without penalty, subject to Section 73(11). |
| Adjudication | The proper officer considers the representation and determines tax, interest and penalty. |
| Penalty in adjudication | Ten per cent of tax or Rs. 10,000, whichever is higher, under Section 73(9). |
Time limit for notice and order
For Section 73 proceedings, the order under sub-section (9) is ordinarily required within three years from the due date for furnishing the annual return for the relevant financial year, or within three years from the date of erroneous refund. Under sub-section (2), the notice must be issued at least three months before the applicable order deadline.
Section 73 compared with the current Section 74A framework
Sections 73 and 74 continue to govern demand determination for periods up to FY 2023-24. For FY 2024-25 onward, Section 74A provides the demand mechanism for tax not paid or short paid, erroneous refunds and wrongly availed or utilised input tax credit, whether or not fraud, wilful misstatement or suppression is alleged. The applicable penalty consequences differ according to the nature of the conduct.
Related CGST provisions
- Section 72 - Officers to assist proper officers
- Section 74 - Fraud, wilful misstatement or suppression cases up to FY 2023-24
- Section 75 - General provisions relating to determination of tax
- Section 76 - Tax collected but not paid to Government
- Section 78 - Initiation of recovery proceedings
- Section 79 - Recovery of tax
Official legal resources
For the current statutory text, amendments, notifications and circulars, refer to the official India Code - Central Goods and Services Tax Act, 2017, CBIC Tax Information Portal, CBIC GST Portal and GST Council.
Note: This page is an informational presentation of the statutory provision. For a live proceeding, verify the applicable amended law, notification, limitation period and procedural rules for the relevant tax period.