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Section 75 of GST – General provisions relating to determination of tax
(1) Where the service of notice or issuance of order is stayed by an order of a court or Appellate Tribunal, the period of such stay shall be excluded in computing the period specified in sub-sections (2) and (10) of section 73 or sub-sections (2) and (10) of section 74, as the case may be.
(2) Where any Appellate Authority or Appellate Tribunal or court concludes that the notice issued under sub-section (1) of section 74 is not sustainable for the reason that the charges of fraud or any wilful-misstatement or suppression of facts to evade tax has not been established against the person to whom the notice was issued, the proper officer shall determine the tax payable by such person, deeming as if the notice were issued under sub-section (1) of section 73.
(3) Where any order is required to be issued in pursuance of the direction of the Appellate Authority or Appellate Tribunal or a court, such order shall be issued within two years from the date of communication of the said direction.
(4) An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.
(5) The proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing:
Provided that no such adjournment shall be granted for more than three times to a person during the proceedings.
(6) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.
(7) The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.
(8) Where the Appellate Authority or Appellate Tribunal or court modifies the amount of tax determined by the proper officer, the amount of interest and penalty shall stand modified accordingly, taking into account the amount of tax so modified.
(9) The interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability.
(10) The adjudication proceedings shall be deemed to be concluded, if the order is not issued within three years as provided for in sub-section (10) of section 73 or within five years as provided for in sub-section (10) of section 74.
(11) An issue on which the Appellate Authority or the Appellate Tribunal or the High Court has given its decision which is prejudicial to the interest of revenue in some other proceedings and an appeal to the Appellate Tribunal or the High Court or the Supreme Court against such decision of the Appellate Authority or the Appellate Tribunal or the High Court is pending, the period spent between the date of the decision of the Appellate Authority and that of the Appellate Tribunal or the date of decision of the Appellate Tribunal and that of the High Court or the date of the decision of the High Court and that of the Supreme Court shall be excluded in computing the period referred to in sub-section (10) of section 73 or sub-section (10) of section 74 where proceedings are initiated by way of issue of a show cause notice under the said sections.
(12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.
(13) Where any penalty is imposed under section 73 or section 74, no penalty for the same act or omission shall be imposed on the same person under any other provision of this Act.
Related Provisions of the Statute
| Section or Rule | Description |
| Section 73 | Determination of tax 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 |
| Section 74 | Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts |
| Section 79 | Recovery of tax |
| Section 21 | Manner of recovery of credit distributed in excess |
| Section 61 | Scrutiny of returns |
| Section 62 | Assessment of non-filers of returns |
| Section 83 | Provisional attachment to protect revenue in certain cases |
Analysis
These provisions are general provisions for determination of tax and are applicable irrespective of whether the notice invokes the extended period or not
1. If an order of court or Appellate Tribunal stays the service of notice or issuance of order then, the period of such stay will get excluded from the period of issuance of order i.e. 3 years or 5 years as the case may be.
2. When a notice has been issued considering the case to be for fraud or for willful representation or for suppression of facts, and whereas the charges of fraud, suppression and misstatement of facts were not sustainable or not established by an order of Appellate Authority or Appellate Tribunal, then in such case the officer shall determine the tax as if the notice is issued for the normal period of 3 years.
3. An order required to be issued in pursuance of the direction of the Tribunal or a Court shall be issued within two years from the date of communication of the said direction.
4. Opportunity of personal hearing has to be granted when requested for in writing by the person chargeable with tax or where any adverse decision is proposed to be taken against the person.
5. Personal hearing can be adjourned when sufficient cause is shown in writing. However, such adjournment can be granted for a maximum of 3 times. It should be noted that a departmental show cause notice which specifies three consecutive dates for personal hearing (failing which an ex-parte order is passed) will not be held to be valid as this is against the principles of natural justice.
6. The relevant facts and basis of the decision shall be set out in the order, which means a speaking order needs to be placed.
7. The amount of tax along with interest and penalty should not exceed the amount mentioned in the notice and the grounds shall not go beyond what is mentioned in the notice.
8. When the decision of Tribunal/ Court/ Appellate authority modifies the amount of tax, correspondingly interest and penalty shall also be modified to that extent by the proper officer.
9. Interest shall be payable in all cases whether specifically mentioned or not. This provision indicates that were ‘penalty’ is OMITTED from the SCN, even if applicable, the adjudicating authority cannot confirm demand for penalty by furnishing the obvious deficiency in SCN. This is evident in the fact that Legislature has thoughtfully only save omission of ‘interest’ from SCN and not ‘interest and penalty’.
10. If the order is not issued within the time limits as prescribed in sub-section (10) of section 73 or (10) of section 74, i.e., 5 years in case of fraud, wilful-misstatement or suppression and 3 years in any other case, the adjudication proceedings shall be deemed to be concluded. Reference may be taken from the decision in case of Ramlal & Ors v. Rewa Coalfields Ltd AIR [1962 SC 361], wherein Hon’ble Supreme Court has recognized that lapse of time to pass such orders (lapse of limitation) is a right to the taxpayer that should not be easily disturbed. And with a specific embargo, it is well accepted that where SCN is issued ‘after’ 33 months (or 54 months) or adjudication orders are passed ‘after’ 36 months (or 60 months), the entire proceedings would fail. For the remainder of the period, fresh SCN is required and curing this deficiency or adjudicating for ‘adjusted shorter period’ is NOT permissible. This is well established administrative law principle. Refer discussion under section 6 of the CGST Act regarding ‘administrative discipline’ and related circulars to be referred on this administrative law principle.
11. An issue on which Appellate Authority or Appellate Tribunal or High Court has given its decision which is prejudicial to the interest of the revenue and an appeal to the Appellate Tribunal or High Court or Supreme Court against such decision is pending, then the period spent between the two dates of decision shall be excluded in computing the period of 3 years or 5 years respectively, for issue of order. It is important to note that the ‘exclusion period’ due to pendency of an issue is NOT limited to case of the same taxpayer but of ANY OTHER taxpayer. This is a clear measure to protect interest of revenue provided ‘proceedings under section 73 or 74 are initiated’. This is also referred to as ‘call book’ cases. Reference may be had to the circulars issued under earlier laws and GST regarding ‘administrative discipline’ where administration of ‘call book’ cases is discussed. This discussion may be found under section 6 of the CGST Act.
12. Any amount of self-assessed tax or interest payable, whether wholly or in part in accordance with a return furnished under section 39 shall be recovered under the provisions of section 79. It is important to understand what would constitute ‘undisputed arrears’. While self-assessed tax is an undisputed arrear, interest being an automatic levy, unpaid interest on self-assessed tax would also be an undisputed arrear. It is to be noted further that under New Returns, liability to output tax is ‘deemed’ to be admitted once ANX1 is filed. Where such fiction is in operation, tax liability on all such cases can be ‘treated’ as undisputed arrears and straight away taken to section 79 for issue of garnishee proceedings.
13. It is also provided that when the penalty is imposed under Section 73 & 74, no penalties shall be imposed under any other provisions of this Act for the same act or omission.
Comparative Review
These provisions of Section 73, 74, and 75 are much broader than the provisions contained in erstwhile Central Indirect Tax laws.
Earlier in Central Excise and Service Tax laws, the demand of tax can be made up to a maximum of 5 years. The normal period for which the notice could be issued is 2 years in Central Excise Law and 30 months in Service Tax Law. The VAT law seems to be quite different from the central excise and service tax provisions.
However, the conditions for such extended period are the same as in the erstwhile Indirect Tax Laws. The meanings of fraud, misstatement or suppression are still to be understood in the same way as in the erstwhile law i.e., deliberate intent to avoid tax requires to be established and sustained.
Unlike the erstwhile law, the time limit of 3 years and 5 years from the issue of orders and not for serving of show cause notice.
Frequently Asked Questions
Who has the power to issue a notice/ order?
“Proper officer” as defined under Sec 2(91) of the Act and assigned vide Circular No. 3/3/2017-GST dated 05.07.2017 read with Circular No.31/05/2018-GST dated 09.02.2018 to exercise powers under Sections 73 and 74 can issue notices and orders under the said Sections
Is notice for a period of 5 years valid even if charge of suppression, fraud and wilfulmisstatement are not sustained?
No, when the allegations of fraud, suppression or wilful-misstatement are not established, the notice issued under section 74 would get covered under section 73 and 3 years’ time limit would be applicable for date of issue of order.
What is the condition for giving a repeat notice under Section 73(3) for a different period?
The condition is that the grounds relied upon should be same as in the notice issued previously. In such cases, it is not essential to issue a detailed notice. It would suffice, if a statement giving the statement of alleged amounts is issued.
Whether there is any time limit to issue notice?
The time limit to issue notice is at least 3 months/ 6 months (in case of extended period)prior to the last day to pass the order i.e. 3 years or 5 years from the due date for furnishing 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 3 years or 5 years from the date of erroneous refund.
Is interest applicable in all cases, even if not specifically mentioned?
Yes, interest is applicable whenever the tax is payable whether or not it is specifically mentioned.
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