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Show Cause Notice under section 73 of GST Act

Reasons of show cause notice (SCN) u/s 73

Section 73 of GST Act applies to the cases when any reason other than fraud (without any intention of tax evasion):

  • Tax has not paid or,
  • Tax has short paid or,
  • Refund has wrongly received or,
  • Input tax credit has been wrongly availed or utilized

The proper officer who is authorized under section 5 shall serve SCN on the taxpayer asking him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable as per the provisions of the act. Further, a summary of the total demand in Form DRC-01 also will be issued along with the notice.

Time limit for serving notice

The date within which an GST notice can be issued depends on the last date of passing of the adjudication order The proper officer has to issue SCN at least 3 months before the last date of passing order.

The time limit for issuance of adjudication order is three years from the due date for furnishing of annual return for the financial year to which the tax or refund relates.

Note - if the proceedings are not completed by tax officer on or before the specified end date, then the notice will be ‘deemed to be concluded.

Illustration :

Relevant year

Due date for filing annual return

Last date to pass order

Last date to issue SCN

2019-20

31-Dec-2021

30-Dec-24

29-Sep-24

First opportunity - Nil penalty

The taxpayer, before notice or statement is issued, can discharge the tax liability along with the interest either upon self-assessed by him or assessed by the officer. There is a mandatory facility in which the officer before SCN will serve an intimation in Form GST DRC-01A asking the taxpayer to pay the tax along with interest.

if tax demanded along with interest is paid within 30 days, then no penalty will be payable. The taxpayer shall inform the proper officer in writing about payment. Upon receipt of such information, the proper officer shall give an acknowledgment in Form GST DRC-04 and shall not serve any notice under Section 73 with respect of the tax so paid and no penalty shall be levied. In case of partial payment, the officer can issue a demand notice for the balance amount.

Second opportunity - Nil penalty

As per section 73(3), If the tax along with interest is paid within 30 days from the date of issue of show cause notice, there will be no penalty payable. The taxpayer shall inform the officer in writing about payment. Upon receipt of such information, the officer shall give an acknowledgment in Form GST DRC-04 and shall not serve any notice under Section 73 with respect of the tax so paid and no penalty shall be levied.

Levy of penalty

The tax officer, after considering the representation made by the taxpayer in Form GST DRC-06, will determine the amount of tax, interest, and penalty. The amount of penalty will equivalent to 10% of tax subject to a minimum of Rs 10,000. The officer shall pass an order along with the summary of demand in GST DRC-07 within three years from the due date for furnishing of annual return for the financial year to which the tax or refund relates

Mode of serving notice

Notice shall be communicated to the taxpayer using any of the modes given in section 169 of the CGST act.

Time limit to reply SCN

Section 73 does not provide any time limit within which a taxable person has to reply to the notice. A particular date may be given in the SCN within which the taxpayer will have to reply. GST experts suggested that the reply should be file within 30 days from the date of receipt of SCN.

Steps to view notice on GST portal

Step 1: Visit the login page of the GST official website. Enter valid login credentials and Captcha code in respective fields.

Step 2: Navigate to the "Services" > User Services > "View Additional Notices/Orders" > "Case details".

Step 3: Now, all notices or orders issued by the GST department will display on the screen.

Step 4: Click the link of relevant notice in the "Attachments" field to view the show cause notice issued under section 73.

Steps to reply notice on GST portal

Click "Replies" on the case detail page.

Click ‘Add Reply’ and select ‘Reply’.


TaxGyata Team

TaxGyata Team

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