Demand payment related

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A taxpayer received a demand order for unpaid GST and is asking if they can use their Input Tax Credit (ITC) balance to pay the interest and penalty. The discussion clarifies that interest and penalty amounts under GST law generally must be paid in cash, not from the ITC ledger. It also outlines the different sections for demand notices (Section 73 for non-fraud, Section 74 for fraud), recovery mechanisms, and the importance of taxpayers responding promptly to notices and asserting their rights, such as requesting a hearing.

uma sharma

uma sharma (Querist)

29 January 2024 Sir , i have received notice of asmt 10 due to trans -1 , itc but i have not responded . Officer passed order under drc 07 u/s 73 and 50 one year before . Now i have to pay that can i pay interest and penalty amount by using balance of itc available in my credit ledger.

CA Altamush Zafar

CA Altamush Zafar (Expert)

29 January 2024 Interest and penalty amount can only be paid in cash

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

17 August 2025 Demand Under GST Law
Use Section 73 if there’s inadvertent short payment or misclaimed ITC (no fraud); Section 74 is used for fraud cases. Timelines: 3 years for non-fraud, 5 years for fraud. SCNs must be issued 3–6 months in advance.
TaxBuddy.com
CAclubindia
StockGro
Recovery Mechanisms
Post-adjudication, recovery can involve property attachment, refund offsetting, and even recovery from third parties (who must comply unless proven no payment is due).
Pitchersglobal
SAG Infotech Official Blog
MYGSTRefund
Rights Under the Law
Orders lacking procedural fairness—like denial of hearing—can be quashed. Recent High Courts (Delhi, Madras) have upheld taxpayers' right to be heard.
CXOToday.com
The Times of India
Stay Updated
From July 2025, GST returns cannot be revised beyond 3 years from due date.
The Times of India
Delhi is considering a one-time amnesty scheme for pre-GST tax disputes.
The Times of India
Takeaway for Taxpayers
Act quickly if an SCN arrives.
Ensure accurate GST filings and periodic reconciliations.
Maintain audit-ready documentation.
Assert your rights—request hearings if necessary.
Watch for procedural changes and relief schemes.

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