Determination of tax, pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts
Section 73, CGST Act
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Section 73 is the notice-and-order route for tax short-paid, unpaid, wrongly refunded or wrong ITC WITHOUT fraud, for periods up to FY2023-24. Penalty is only 10% of tax (or Rs 10,000). If you pay the tax and interest before the notice, no penalty and no notice; if within 30 days of the notice, no penalty. The order must be passed within 3 years of the annual-return due date.
What this means in practice
The parts that actually decide cases — the things a practitioner checks first.
Limitation: notice at least three months before the order, and the order within three years of the due date of the annual return for that year. A notice issued beyond that is void, and the date to check first in any file.
Section 128A gives a full waiver of interest and penalty for section 73 demands for FY 2017-18, 2018-19 and 2019-20 if the tax is paid in full and SPL-01 or SPL-02 is filed by the notified date – the procedure is in Rule 164. Check this before contesting an old 73 demand.
Paying tax with interest before the notice closes the matter with no penalty (73(5) and (6)); paying within thirty days of the notice ends it with no penalty too.
A 73 notice cannot be converted into a 74 demand at the order stage – the fraud allegation has to be in the notice.
Questions people actually ask
Real questions we get on this provision, answered straight.
We have a section 73 demand for FY 2018-19. Is there any relief?+
Yes. Section 128A waives the interest and penalty entirely for FY 2017-18 to 2019-20 if you pay the tax in full and file SPL-01 (no order yet) or SPL-02 (order passed) by the notified date under Rule 164. Compare that with the cost of litigating before you file a reply.
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
4,098 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 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.
(5) The person chargeable with tax may, before service of notice under subsection
(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.
(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 the said 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. 1 [
(12) The provisions of this section shall be applicable for determination of tax pertaining to the period up to Financial Year 2023-24.]
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 SANJANA ENTERPRISES v. THE COMMERCIAL TAX OFFICER SGSTO-171, TIPTUR
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EMISHA TECHNOLOGY SOLUTIONS LLP v. THE COMMERCIAL TAX OFFICER LGSTO – 37
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M/s Yadidya Timber Depot v. The Assistant Commissioner (ST)
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Tvl Sri Balaji Traders v. The State Tax Officer,
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Tvl Sri Balaji Traders v. The State Tax Officer,
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Tvl. Sree Valli Store v. The State Tax Officer
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Tvl. Sree Valli Store v. The Appellate Deputy Commissioner (GST)
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Tvl Dhanam Build Mart v. The Deputy State Tax Officer,
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314 more on record. Search all GST case law →
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
date not stated · Inserted
Inserted by section 136 of The Finance Act (No. 2) Act, 2024 No. 15 of 2024 dated 16.08.2024.
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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