Key Time Limit for Issuing GST Demand Notices Under Sections 73 and 74: Know Applicable GST Penalties:

Key Time Limit for Issuing GST Demand Notices Under Sections 73 and 74: Know Applicable GST Penalties Here is detailed information about the key time limits for issuing GST demand notices or orders for different financial years, mainly under Sections 73 and 74, and penalties applicable in different situations. These rules mainly apply when tax has not been paid, has been short paid, or has been wrongly claimed (like excess Input Tax Credit or a refund you should not have taken). The time limits and penalties vary depending on whether the issue involves fraud or no fraud.

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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):

Financial Year	GSTR-9 Due Date	Last Date to Issue SCN	Last Date to Pass Final Order
2017-18	05-Feb-20	30-Sep-23	31-Dec-23
2018-19	31-Dec-20	31-Jan-24	30-Apr-24
2019-20	31-Mar-21	31-May-24	31-Aug-24
2020-21	28-Feb-22	30-Nov-24	28-Feb-25
2021-22	31-Dec-22	30-Sep-25	31-Dec-25
2022-23	31-Dec-23	30-Sep-26	31-Dec-26
2023-24	31-Dec-24	30-Sep-27	31-Dec-27

• 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:

Financial Year	GSTR-9 Due Date	Last Date to Issue SCN	Last Date to Pass Final Order
2017-18	05-Feb-20	05-Aug-24	05-Aug-24
2018-19	31-Dec-20	30-Jun-25	30-Jun-25
2019-20	31-Mar-21	30-Sep-25	30-Sep-25
2020-21	28-Feb-22	31-Aug-26	31-Aug-26
2021-22	31-Dec-22	30-Jun-27	30-Jun-27
2022-23	31-Dec-23	30-Jun-28	30-Jun-28
2023-24	31-Dec-24	30-Jun-29	30-Jun-29

• 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:

Situation	Penalty (Section 73 – No Fraud)	Penalty (Section 74 – With Fraud)
Tax paid before SCN is issued	No penalty	15% of tax amount
Tax paid within 30 days after SCN	No penalty	25% of tax amount
Tax paid within 30 days after final order	10% of tax or Rs. 10,000 (whichever is higher)	50% of tax amount
Tax paid after 30 days of final order	10% of tax or Rs. 10,000 (whichever is higher)	100% of tax amount

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

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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.