Prominent tax experts and industry leaders voiced serious concerns over the growing misuse of Section 74(A) of the GST law for issuing scrutiny notices, during a GST conclave jointly organized by the CGST Ahmedabad Zone and the Gujarat Chamber of Commerce and Industry (GCCI) on Monday.
The provision under Section 74(A) is specifically designed for cases involving fraud or wilful misstatement. However, experts highlighted that the clause is increasingly being applied to routine cases involving minor discrepancies-leading to harsh penalties and exclusion from amnesty schemes, which are otherwise available under Section 73 for genuine errors.
"Misuse Leading to Unfair Burden on Taxpayers," Says GCCI
A senior representative and co-chairman of GCCI's Indirect Tax Committee stated,
"The majority of GST scrutiny notices today are being issued under Section 74(A), even in the absence of fraudulent intent. This defeats the purpose of the law and imposes an unfair burden on compliant taxpayers."
He urged CGST authorities to restrict the use of Section 74(A) strictly to cases where fraud is suspected and emphasized the need for:
- Digitization of all GST notices and orders to ensure transparency
- Faster processing of GST registrations, particularly for small businesses
- A balanced and fair approach toward scrutiny and audit procedures
CGST Officials Respond to Industry Feedback
Responding to the concerns, Sunil Kumar Mall, Chief Commissioner of CGST Ahmedabad Zone, reassured participants of the department's efforts to facilitate compliance.
"We've increased manpower for GST registration processing and taken several initiatives to streamline taxpayer support."
Sanjay Bansal, Principal Commissioner of CGST Ahmedabad, acknowledged the feedback and stressed that as GST completes eight years of implementation, the focus remains firmly on ease of doing business, especially for MSMEs.
He added that the government is open to constructive dialogue and will continue evolving its approach to match industry needs.
Way Forward: Policy Review and Procedural Reforms
Officials from the CGST Ahmedabad Zone confirmed that stakeholder feedback from the conclave would be evaluated, and corrective measures may be introduced to avoid misuse of legal provisions and improve procedural efficiency.
The conclave marked a vital touchpoint between the government and industry, setting the stage for future collaborations aimed at ensuring fair tax administration, legal clarity, and business-friendly reforms.
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