CGST §73 — Demand of tax NOT involving fraud / suppression

When tax has been short-paid or ITC wrongly availed for reasons OTHER THAN fraud / wilful misstatement, officer issues SCN under §73 within 2 years 9 months of due date. Order to be passed within 3 YEARS. No penalty if tax + interest paid within 30 days of SCN. Penalty after order: 10% of tax or ₹10,000 whichever higher.

Key points

• §73 applies where it appears to the proper officer that any TAX has not been paid OR short paid OR erroneously refunded OR INPUT TAX CREDIT has been wrongly availed or utilised for any reason OTHER THAN fraud, wilful misstatement, or suppression of facts to evade tax (those go to §74).
• PROCEDURE: (1) Officer serves SHOW CAUSE NOTICE under §73(1) within THREE MONTHS BEFORE the time limit specified in §73(10) — calling on the person to show cause why tax + interest + penalty should not be demanded;
• (2) §73(10) — the ORDER must be passed within THREE YEARS from the due date for furnishing of annual return for the financial year to which tax not paid or ITC wrongly availed relates (so effective SCN deadline = 2 years 9 months).
• VOLUNTARY PAYMENT under §73(5) / §73(6) — if the person PAYS the tax + interest under §50 BEFORE the SCN OR within 30 days of SCN, NO PENALTY is leviable;; SCN is closed.
• If self-assessed tax remains unpaid for more than 30 days from due date, interest under §50 continues but penalty under §73(11) = 10% of the tax due or ₹10,000 WHICHEVER HIGHER.
• ORDER under §73(9) imposes tax + interest + penalty 10% of tax or ₹10,000 whichever higher.
• The PERIOD covered by an SCN under §73 is up to 3 years from annual-return due date — beyond that, §74 (5-year fraud window) applies.
• Recent timeline: for FY 17-18, time limit extended via successive notifications;
• for FY 18-19 onwards normal rule applies.

Reference: §73 CGST Act 2017