Determination of tax under Section 73 and 74 of the KSGST/CGST Act, 2017 –guidelines issued

Last updated: 26 February 2021

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The Kerala State Goods and Services Tax Department has issued guidelines for determining tax liabilities under Sections 73 and 74 of the KSGST/CGST Act, 2017. These sections cover situations where tax has not been paid or has been paid incorrectly. Section 73 applies to cases without intent to evade tax, such as unintentional short payments or erroneous refunds. Section 74 is for cases involving fraud, wilful misstatement, or suppression of facts to evade tax. The guidelines detail the procedures, time limits, and required forms for issuing notices, making payments, and finalising orders.

State Goods and Services Tax Department, Kerala FILE No. CT/1444/2021-C9 Office of the Commissioner of State Tax State Goods and Services Tax Department Tax Towers, Karamana, Thiruvananthapuram Dated:22/02/2021 Guidelines Sub: Determination of tax under Section 73 and 74 of the KSGST/CGST Act, 2017guidelines issuedreg. There may arise some instances where the tax under GST was either not paid or not paid correctly. The determination of tax by a proper officer may thus become n

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FAQ :

These sections provide the framework for the proper officer to determine tax liabilities when tax has not been paid or has been paid incorrectly, covering situations ranging from inadvertent mistakes to deliberate tax evasion.

Section 73 applies when there is no intention to evade tax (e.g., unintentional short payment, erroneous refund, wrongly availed ITC). Section 74 applies when there is an intention to evade tax through fraud, wilful misstatement, or suppression of facts.

For Section 73, orders must be issued within 3 years from the due date of the annual return (or 3 years from an erroneous refund). For Section 74, orders must be issued within 5 years from the due date of the annual return (or 5 years from an erroneous refund).

Suppression means not declaring required facts or information in returns, statements, or reports, or failing to provide information when requested in writing by the proper officer.

Form GST DRC-01A provides a pre-notice opportunity for the person chargeable with tax to declare and pay the ascertained tax deficiency, along with interest and penalty, potentially avoiding further litigation.

If the taxpayer pays the full tax and interest (and applicable penalty under Section 73(11) or 74(11)) within 30 days of the SCN, the proper officer will issue an acknowledgment (Form GST DRC-05), and proceedings related to that SCN will be concluded.

Notification No : FILE No. CT/1444/2021-C9
Source : https://keralataxes.gov.in/wp-content/uploads/2021/02/Action-us-7374-guidelines.pdf

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