Simplified GST Series –Demands & recovery /Section 73/CGST ACT 2017
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.
(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.
(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.
(3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.
(4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice
Analysis- Section 73 deals with determination of tax and its demand & recovery under certain
circumstances such as:
This section specifically covers determination of such taxes under circumstances of
cases not involving fraud, wilful misstatement or suppression of facts.
(a) Service of notice by proper officer;
(b) Notice shall be served on the person who is chargeable with tax, who has –
– Not paid or short paid the tax;
– Received the erroneous refund;
– Wrongly availed or utilized input tax credit;
(c) Such amounts as mentioned above shall be required to be determined along with the applicable interest as per Section 50 and penalty leviable under the provisions of this Act or the rules made thereunder.
Where no notice is required to be issued for demand: Subsequent to issue of a notice under Section 73(1) to a person, where the proper officer finds similar issues for any period, the proper officer may, instead of issuing a detailed notice for such period, serve a statement containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such subsequent period not covered in the earlier notice so issued under section 73(1). Service of such statement shall be deemed to be service of notice as per Section 73(1) on the condition that the grounds relied upon are the same as those mentioned in the earlier notice issued for previous period. The proper office shall along with the statement, provide a summary in Form GST DRC-02, specifying therein the details of amount payable.
(5) The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment.
(6) The proper officer, on receipt of such information, shall not serve any notice under Sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder.
(7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable.
Voluntary payment of tax and interest as per Section 50 before issue of notice/statement can be done either
and the same shall be intimated to the proper officer in Form GST DRC-03 and the proper officer shall issue an acknowledgement, accepting the payment made, in FORM GST DRC–04. Thereafter, the proper officer shall not serve any notice / statement to the extent of such payment. In such situations, there can be no further proceedings with regard to tax and penalty so paid.
(8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of thesaid notice shall be deemed to be concluded.
(9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order.
(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of 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 three years from the date of erroneous refund.
(11) Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax.
Analysis- In situations where the assessee makes the payment of tax along with interest within 30 days of issuance of Notice / Statement and intimates the proper officer of such paymentin FORM GST DRC-03 the proper officer shall issue an order in FORM GST DRC-05 Concluding the proceedings in respect of the said notice and subsequently no penalty shall be payable.
Summary of penalty provisions-
If tax, interest and penalty (as indicated in the table below) is paid, then all the proceedings in that respect shall stand concluded-
|Pay Tax plus Interest||Amount of penalty|
|Before issuance of show cause notice||No penalty|
|Within 30 days after the issuance of
show cause notice
|In any other case||10% of the tax or Rs. 10,000 whichever is higher.|
Provisions of Section 73 very important so any queries/doubts related to above mailed at [email protected]