Chapter XV - Demands and recovery
Section 74
Section 74: Determination of tax for periods up to FY 2023-24 with fraud
Section 74 addresses fraud, wilful misstatement or suppression-based CGST demands for periods through FY 2023-24; section 74A applies later.
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Need advice on Section 74?
This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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 by 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 equivalent to the tax specified in the notice.
(2) The proper officer shall issue the notice under sub-section (1) at least six 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 statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilful-misstatement or suppression of facts to evade tax, for 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 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.
(6) 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.
(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) pays the said tax along with interest payable under section 50 and a penalty equivalent to twenty-five per cent. of such tax within thirty days of issue of the notice, 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 the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order.
(10) The proper officer shall issue the order under sub-section (9) within a period of five 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 five years from the date of erroneous refund.
(11) Where any person served with an order issued under sub-section (9) pays the tax along with interest payable thereon under section 50 and a penalty equivalent to fifty per cent. of such tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded.
(12) The provisions of this section shall be applicable for determination of tax pertaining to the period up to Financial Year 2023-24.
Explanation 1.—For the purposes of section 73 and 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 section 73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122 and 125 are deemed to be concluded.
Introduction
This historic-period route requires the specified evasion ground. A merely incorrect return does not by itself establish fraud or wilful suppression.
Key takeaways
Period and allegation
Section 74 applies only through FY 2023-24 and requires tax not paid or short paid, erroneous refund or wrong ITC by reason of fraud, wilful misstatement or suppression of facts to evade tax.
Notice and representation
The show-cause notice specifies tax, section 50 interest and penalty; the taxpayer can contest the factual and legal ground.
Statutory payment options
The Act provides distinct pre-notice, post-notice and post-order payment windows with specified penalty percentages. Their exact application depends on the case stage and conditions.
Order and fallback
The order limit is ordinarily five years from the relevant annual-return due date or erroneous refund. Under section 75(2), if the fraud charge fails on appeal, determination proceeds as if under section 73.
Period and allegation
Section 74 applies only through FY 2023-24 and requires tax not paid or short paid, erroneous refund or wrong ITC by reason of fraud, wilful misstatement or suppression of facts to evade tax.
Notice and representation
The show-cause notice specifies tax, section 50 interest and penalty; the taxpayer can contest the factual and legal ground.
Statutory payment options
The Act provides distinct pre-notice, post-notice and post-order payment windows with specified penalty percentages. Their exact application depends on the case stage and conditions.
Order and fallback
The order limit is ordinarily five years from the relevant annual-return due date or erroneous refund. Under section 75(2), if the fraud charge fails on appeal, determination proceeds as if under section 73.
Practical checklist
Do
- Verify FY and exact evasion allegation.
- Preserve evidence bearing on intent and disclosure.
- Track the correct stage-specific payment and order dates.
- Request a hearing and a reasoned order where needed.
Avoid
- Apply the pre-FY 2024-25 demand route to a later financial year.
Frequently asked questions
Can a fraud allegation automatically stand without proof?
No. Section 75(2) provides a non-fraud determination route if an appellate forum finds the section 74 fraud ground unsustainable.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026