Summary: The introduction of Section 74A of the CGST Act, 2017, with effect from 1 November 2024, raises a jurisdictional question concerning GST show cause notices issued between 1 April and 31 October 2024 for transactions belonging to FY 2024-25. Advocate Ravindra Kumar Rastogi examines whether notices originally issued under Sections 73 or 74 can lawfully result in adjudication orders after the commencement of Section 74A. The Finance (No. 2) Act, 2024 inserted subsection (12) into Sections 73 and 74, restricting their application to tax periods up to FY 2023-24, while the newly introduced Section 74A expressly applies to FY 2024-25 onwards. Although the earlier provisions were operative when some notices were issued, the author argues that subsequent determinations must follow the financial-year allocation established by Parliament. The analysis considers the distinction between substantive tax liability and procedural machinery, the effect of statutory amendments on pending proceedings, and the limits of savings under the General Clauses Act, 1897. It also examines whether an earlier notice can be treated as a Section 74A notice without fresh proceedings, particularly in view of Section 74A’s notice requirements, twelve-month adjudication period, possible six-month extension and Section 75(7)’s prohibition against demands exceeding the notice or introducing new grounds. Decisions of the Madras High Court involving Tvl. RB Communication, M. Gnanaraj and Baskar Selvakumar are discussed, together with the limitations of applying those rulings to notices actually issued before 1 November 2024. The article concludes that the Revenue retains the ability to issue a fresh notice under Section 74A within the prescribed limitation period, while taxpayers may challenge orders based on an inapplicable statutory provision.
1. The Question
Financial Year 2024-25 began on 1 April 2024. Section 74A of the CGST Act, 2017, which now governs every demand of tax for that year, came into force only on 1 November 2024. Between the two dates lie seven months in which the year had begun but the provision meant for it was not yet law. In those months officers went on doing what they had always done. After scrutiny under Section 61, or after a survey, they issued show cause notices under Section 73 or Section 74 for April, May, June and the following months of 2024. Many of those notices were decided long after 1 November 2024, some under Section 73, some under Section 74A(6), and some under both at once.
Two questions arise. The first is which provision governs the tax of 1 April 2024 to 31 October 2024: the old pair of Sections 73 and 74, because they alone were in force when the supplies were made, or Section 74A, because the months belong to FY 2024-25. The second is what becomes of a notice which was issued under Section 73 or Section 74 during those seven months and was still pending on 1 November 2024.
2. The Text
Three sub-sections were enacted together by the Finance (No. 2) Act, 2024. Section 136 added sub-section (12) to Section 73:
“(12) The provisions of this section shall be applicable for determination of tax pertaining to the period up to Financial Year 2023-24.”
Section 137 added an identical sub-section (12) to Section 74. Section 138 inserted Section 74A, whose heading speaks of determination of tax “pertaining to Financial Year 2024-25 onwards” and whose sub-section (12) reads:
“(12) The provisions of this section shall be applicable for determination of tax pertaining to the Financial Year 2024-25 onwards.”
All three were brought into force on the same day, 1 November 2024, by Notification No. 17/2024 Central Tax dated 27.09.2024. The State Acts were amended on the same lines. The whole controversy turns on reading these three sub-sections with that one date.
3. The Case for Sections 73 and 74
The argument for the old provisions deserves to be stated at its strongest.
(a) On every day from 1 April 2024 to 31 October 2024 the only provisions on the statute book for recovery of tax not paid or short paid were Sections 73 and 74. Section 74A did not exist.
(b) Sections 73 and 74 carried no sub-section (12) on those days. Nothing in them excluded FY 2024-25. A notice issued under Section 73 on, say, 25 October 2024 for April to June 2024 was issued under a provision that was fully available for that period.
(c) A statute is presumed to be prospective. Section 74A, having come into force on 1 November 2024, should therefore apply to tax periods from November 2024 and not to the months that went before.
(d) Proceedings validly begun under a law are ordinarily saved when that law is changed, on the principle of Section 6 of the General Clauses Act, 1897.
Points (a) and (b) are correct as far as they go. Points (c) and (d) do not survive the words Parliament has used.
4. The Unit Is the Financial Year, Not the Date
Parliament had two ways of drawing the line. It could have said that Section 74A applies to supplies made, or to tax periods beginning, on or after the date of its commencement. It did not. It drew the line by the financial year. Section 73 and Section 74 are confined to tax “pertaining to the period up to Financial Year 2023-24”. Section 74A is given the tax “pertaining to the Financial Year 2024-25 onwards”. The tax of April 2024 pertains to FY 2024-25 as surely as the tax of March 2025 does. There is no third category for the first seven months.
This is not an accident of drafting. The whole scheme of limitation in these provisions hangs on the financial year. Under Section 73(10) the order must be made within three years from the due date of the annual return “for the financial year” to which the tax relates. Under Section 74A(2) the notice must issue within forty two months from the due date of the annual return for the financial year. An annual return is one return for one year. If April to October 2024 went to Section 73 and November 2024 to March 2025 went to Section 74A, a single financial year with a single annual return would carry two periods of limitation, two schemes of penalty and two sets of time limits for the order. The statute does not contemplate a divided year.
Nor is this retrospective legislation of the kind the presumption guards against. The liability to tax is created by Section 9 and was the same before and after 1 November 2024. Sections 73, 74 and 74A are machinery for determining that liability. A person has no vested right in a particular procedure, and a change in procedure applies to pending and future determinations unless the statute says otherwise: Hitendra Vishnu Thakur v. State of Maharashtra, (1994) 4 SCC 602. On 1 November 2024 no period of limitation for FY 2024-25 had expired or even begun to run out, so nothing had vested in anybody. The penalty in a case without fraud is also unchanged, being ten per cent of the tax or ten thousand rupees, whichever is higher, under Section 73(9) and under Section 74A(5)(i) alike.
The date 1 November 2024 therefore answers a different question. It tells us from when the new machinery became available. It does not tell us which months the machinery covers. That is answered by sub-section (12), and the answer is the whole of FY 2024-25.
5. What Sub-Section (12) Does to a Pending Notice
Take the notice issued under Section 73 in October 2024 for April to June 2024. It may be granted that the notice was good on the day it was issued. The difficulty comes later. From 1 November 2024 Section 73 “shall be applicable for determination of tax pertaining to the period up to Financial Year 2023-24”. The determination of tax under Section 73 is the order under sub-section (9). When the officer sits down after 1 November 2024 to make that order, the section under which he is acting tells him in terms that it is not applicable to the year before him. He cannot determine under Section 73 what Section 73 itself now declines to determine.
Section 6 of the General Clauses Act does not rescue the notice. That section applies where an enactment is repealed, and then only “unless a different intention appears”. Section 73 has not been repealed. It remains in full force for the years up to FY 2023-24. What has happened is that its field has been cut down by express words, and no saving was enacted for notices already issued for FY 2024-25. Where the legislature, in the same breath, narrows the old provision by financial year and hands that financial year to a new provision, the different intention is plain on the face of the Act.
The same reasoning applies, word for word, to a notice under Section 74 and to Section 74(12).
6. Can the Old Notice Be Carried into Section 74A?
Faced with this, the officer often takes the other course. He leaves the notice as it is and writes the order under Section 74A(6). This fails for separate reasons.
- An order under Section 74A(6) is the last step of a proceeding which begins with a notice under Section 74A(1). The time for the order under Section 74A(7) is counted from the notice specified in sub-section (2). The lower penalties under sub-sections (8) and (9) are offered with reference to that notice. A notice under Section 73 is not that notice.
- It is true that the citation of a wrong provision does not vitiate an act if the power to do it exists under another provision: N. Mani v. Sangeetha Theatre, (2004) 12 SCC 278. But that principle requires the power to exist on the day the act is done. On a day in October 2024 there was no Section 74A. A notice cannot be referred to a power that had not yet been created.
- Section 75(7) forbids an order which demands more than the notice or which rests on grounds other than those in the notice. A notice framed under Section 73, which often shows interest and penalty as nil, cannot support an order under a different provision with interest and penalty added.
- If the department still insists that the notice must be treated as one under Section 74A, it must take the whole of Section 74A with it. The order must then issue within twelve months of the notice, or within eighteen months if the Commissioner has extended the time in writing before the twelve months ran out, and on failure the proceedings are deemed to be concluded under Section 75(10). A notice of October 2024 decided in the middle of 2026 is beyond even the outer limit. The department cannot claim the power of Section 74A(6) and disown the time limit that Section 74A(7) attaches to it.
The result is that such an order is bad whichever label is put on it. As an order under Section 73 it is barred by Section 73(12). As an order under Section 74A(6) it has no notice under Section 74A(1) behind it and, in most cases, is out of time as well. An order which describes itself as passed under both provisions shows only that the officer did not decide under which power he was acting.
7. What the Courts Have Said So Far
The Madurai Bench of the Madras High Court has dealt with the matter in a line of short orders. In Tvl. RB Communication v. State Tax Officer, W.P.(MD) No. 3819 of 2026, decided on 11.02.2026, a notice had been issued under Section 74 for a period after 1 April 2024. The State conceded that Section 74 had been wrongly invoked in place of Section 74A. The Court held the notice and the order to be without jurisdiction, set the order aside, and directed that it be treated as a notice under Section 74A to which the dealer could reply. Orders to the same effect are reported in M. Gnanaraj v. Assistant Commissioner and Baskar Selvakumar v. Assistant Commissioner, where a Section 73 notice and a Section 74 order for FY 2024-25 met the same fate.
Two cautions are needed in using these orders. First, they record the submission that Sections 73 and 74 “stood omitted with effect from 01.04.2024”. That is not exact. Neither section has been omitted. Each has been confined, with effect from 1 November 2024, to tax up to FY 2023-24. The conclusion of the Court is right, but it rests on sub-section (12) and not on any omission. Secondly, the reported cases concern notices issued after Section 74A had come into force. The notice issued between 1 April 2024 and 31 October 2024, when Section 73 was the only provision available, has not yet received a reasoned decision, and that is the question which now awaits the High Courts.
The direction to treat the old order as a notice under Section 74A is also not free from difficulty. It is a practical course adopted on concession, and it leaves open from which date the twelve months under Section 74A(7) are to be counted. A dealer who accepts such a remand should have that point recorded.
8. The Revenue Loses Nothing
It may be said that this view lets a defaulter escape on a technicality. It does not. The annual return for FY 2024-25 was due on 31 December 2025. A notice under Section 74A(1) can be issued within forty two months of that date, that is, up to 30 June 2029. The proper officer is free to issue a fresh and proper notice under the correct provision, with the correct penalty proposed, and to decide it within the time that provision allows. When the lawful road is open for years to come, there is no reason to strain the language of sub-section (12) to save a notice issued on the wrong one.
9. Conclusion
The tax of 1 April 2024 to 31 October 2024 pertains to FY 2024-25, and from 1 November 2024 its determination lies under Section 74A alone. Sections 73 and 74 were available when those months ran, but neither is legally fit to determine their tax today, because each now stops at FY 2023-24. A notice issued under either of them during the seven months cannot end in an order under the old provision, and cannot be silently converted into a proceeding under the new one. The proper course for the department is a fresh notice under Section 74A(1). The proper course for the dealer who has received an order on the old notice is to test it on jurisdiction, for an order passed under a provision that does not apply is not cured by the fact that the right provision was lying close at hand.
