What are Sections 73 and 74?

• Section 73 is for Non-fraud Cases: Where the tax problem occurred by mistake or without dishonest intent.
• Section 74 is for Fraud or Intentional Evasion Cases: Where the taxpayer intentionally does not pay or wrongly claims tax benefits.

Time Limits to Issue SCN and Order:

Every year, the GST department is awarded certain deadlines to issue SCN (show cause notice) and orders. These deadlines are separate for Sections 73 and 74:

For Section 73 (No Fraud Cases)

Timelines (Examples by Financial Year):

• Key Point: SCN must be issued 3 months before the order is passed.

For Section 74 (Fraud or Intentional Evasion Cases)

These timelines are slightly longer in comparison to GST non-fraud cases because the law gives the department 5 years from the due date of GSTR-9 to pass an order. Example:

• Key Point: For fraud cases, the time limit to pass the final order is 5 years from the GSTR-9 due date.

Exemptions to Time Limits Under Section 73/74

1. Section 76-Tax Collected but Not Paid: If you collected tax from customers but did not pay it to the government, there is no time limit. The department can recover it anytime.
2. Court or Tribunal Stay: If a court or tribunal puts a stay on proceedings, that stay period is excluded from the calculation of time limits. So, the department gets more time in such cases.
3. Erroneous Refunds: If you received a wrong refund, the time limit is 3 years (under Section 73) or 5 years (under Section 74) from the date of the refund order, not from the GSTR-9 due date.

Penalty Structure Under Sections 73 and 74

Here is the detailed penalty structure applicable in distinct situations under sections 73 and 74:

• Paying early can save a huge amount of penalty, especially in fraud cases.

Final Advice

• Always try to act early on the deadlines to avoid massive penalties.
• Track your GSTR-9 filing dates; they affect when the department can act.
• If you have received a notice or order, always check your deadlines to respond or appeal, and try not to miss that deadline, as this can further lead to an increase in the penalty amount.