Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onward
Section 74A, CGST Act
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From FY2024-25 onward, section 74A is the SINGLE common demand section that replaces the separate section 73 (non-fraud) and section 74 (fraud) routes – both are now folded into one section with one common time limit. Key points: (a) No notice if the amount involved in a financial year is below Rs 1,000 (s.74A(1) proviso). (b) One uniform limitation – the notice must be issued within 42 months of the annual-return due date (or 42 months from the erroneous refund) – s.74A(2); the order must be passed within 12 months of the notice (s.74A(7)), extendable once by up to 6 months by a Joint Commissioner or above. (c) Penalty depends on the ground, not the section: 10% of tax (or Rs 10,000, whichever higher) for non-fraud cases and 100% of tax for fraud/wilful-misstatement/suppression – s.74A(5). (d) Reduced-penalty exits survive: non-fraud – nil penalty if paid before notice, or within 60 days of the SCN (s.74A(8)); fraud – 15% if paid before notice, 25% within 60 days of the notice, 50% within 60 days of the order (s.74A(9)). Note the fraud-case window is now 60 days (was 30 days under old s.74). (e) Self-assessed / collected-but-unpaid tax outstanding beyond 30 days of its due date still attracts the 10% penalty even inside the pre-notice-payment window – s.74A(11). Explanation 2 gives a statutory definition of ‘suppression’ for the whole Act. Sections 73 and 74 continue to govern periods only up to FY2023-24.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Applies from FY 2024-25 onwards. For earlier years use section 73 or 74 – using the wrong section is itself a ground of challenge.
The notice window is forty-two months from the annual-return due date; the order window is twelve months from the notice, extendable once by six months by an officer not below Joint Commissioner.
The pay-and-close windows are sixty days here, not thirty – a genuine improvement on the old sections and easy to miss.
Explanation 2 puts a statutory definition of suppression into the Act for the first time; read it before conceding the fraud rate of penalty.
Questions people actually ask
Real questions we get on this provision, answered straight.
Which section applies to a demand for FY 2024-25?+
Section 74A alone. Sections 73 and 74 stop at FY 2023-24. The penalty still depends on whether fraud is alleged – 10 per cent or Rs 10,000 for a normal case, 100 per cent where fraud is made out – but the limitation and the procedure now come from 74A.
How this provision is built
The skeleton, clause by clause — useful when a notice cites a specific sub-clause.
The exact words of the law
7,466 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
Read the full provision+
(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, 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: Provided that no notice shall be issued, if the tax which has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised in a financial year is less than one thousand rupees.
(2) The proper officer shall issue the notice under sub-section
(1) within forty-two months 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 forty-two months from the date of erroneous refund.
(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.
(5) The penalty in case where any tax which has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised,-
(i) for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, shall be equivalent to ten per cent. of tax due from such person or ten thousand rupees, whichever is higher; (ii) for the reason of fraud or any wilful-misstatement or suppression of facts to evade tax shall be equivalent to the tax due from such person.
(6) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order.
(7) The proper officer shall issue the order under sub-section
(6) within twelve months from the date of issuance of notice specified in sub-section (2): Provided that where the proper officer is not able to issue the order within the specified period, the Commissioner, or an officer authorised by the Commissioner senior in rank to the proper officer but not below the rank of Joint Commissioner of Central Tax, may, having regard to the reasons for delay in issuance of the order under sub-section (6), to be recorded in writing, before the expiry of the specified period, extend the said period further by a maximum of six months.
(8) The person chargeable with tax where 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, may,-
(i) before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 of such tax 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, and the proper officer, on receipt of such information shall not serve any notice under sub-section
(1) or the statement under sub-section (3), as the case may be, in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder; (ii) pay the said tax along with interest payable under section 50 within sixty days of issue of show cause notice, and on doing so, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded.
(9) The person chargeable with tax, where any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, may,-
(i) before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax 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, and the proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder; (ii) pay the said tax along with interest payable under section 50 and a penalty equivalent to twenty-five per cent. of such tax within sixty days of issue of the notice, and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded; (iii) pay the tax along with interest payable thereon under section 50 and a penalty equivalent to fifty per cent. of such tax within sixty days of communication of the order, and on doing so, all proceedings in respect of the said notice shall be deemed to be concluded.
(10) Where the proper officer is of the opinion that the amount paid under clause
(i) of sub-section
(8) or clause
(i) of sub-section
(9) 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.
(11) Notwithstanding anything contained in clause
(i) or clause (ii) of sub-section (8), penalty under clause
(i) of sub-section
(5) 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.
(12) The provisions of this section shall be applicable for determination of tax pertaining to the Financial Year 2024-25 onwards. Explanation 1.-For the purposes of this section,-
(i) the expression "all proceedings in respect of the said notice" shall not include proceedings under section 132; (ii) where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under this section, the proceedings against all the persons liable to pay penalty under sections 122 and 125 are deemed to be concluded. Explanation 2.-For the purposes of this Act, the expression "suppression" shall mean non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer.
High Court cases on this section
Judgments in our index that cite this provision. Being listed does not make a case good law — it may have been appealed or distinguished since. Read it before relying on it.
M/s.PRINCE SEAFOODS EXPORTS v. THE STATE TAX OFFICER (ROVING SQUAD-1)
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M/s.PRINCE SEAFOODS EXPORTS v. THE STATE TAX OFFICER (ROVING SQUAD 1)
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Tvl. PUNITHA ANTONY STORE v. The State Tax Officer (Roving Squad – 2),
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What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2024-08-16 · Inserted
Enforced w.e.f. 01-11-2024 by Notification 17/2024-Central Tax dt 27-09-2024
New common demand-and-recovery section for FY2024-25 onward: merges the erstwhile section 73 (non-fraud) and section 74 (fraud) routes into one section with a single 42-month notice limitation and a 12-month order limit (+6-month extension), while keeping the fraud/non-fraud penalty split and the reduced-penalty payment windows (fraud window widened to 60 days). Also inserts a statutory definition
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Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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