Chapter XV - Demands and recovery
Section 76
Section 76: Tax collected but not paid to Government
Section 76 requires any amount collected as CGST from another person to be paid to Government, even if the underlying supply was not taxable.
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Need advice on Section 76?
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) Notwithstanding anything to the contrary contained in any order or direction of any Appellate Authority or Appellate Tribunal or court or in any other provisions of this Act or the rules made thereunder or any other law for the time being in force, every person who has collected from any other person any amount as representing the tax under this Act, and has not paid the said amount to the Government, shall forthwith pay the said amount to the Government, irrespective of whether the supplies in respect of which such amount was collected are taxable or not.
(2) Where any amount is required to be paid to the Government under sub-section (1), and which has not been so paid, the proper officer may serve on the person liable to pay such amount a notice requiring him to show cause as to why the said amount as specified in the notice, should not be paid by him to the Government and why a penalty equivalent to the amount specified in the notice should not be imposed on him under the provisions of this Act.
(3) The proper officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub-section (2), determine the amount due from such person and thereupon such person shall pay the amount so determined.
(4) The person referred to in sub-section (1) shall in addition to paying the amount referred to in sub-section (1) or sub-section (3) also be liable to pay interest thereon at the rate specified under section 50 from the date such amount was collected by him to the date such amount is paid by him to the Government.
(5) An opportunity of hearing shall be granted where a request is received in writing from the person to whom the notice was issued to show cause.
(6) The proper officer shall issue an order within one year from the date of issue of the notice.
(7) Where the issuance of order is stayed by an order of the court or Appellate Tribunal, the period of such stay shall be excluded in computing the period of one year.
(8) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.
(9) The amount paid to the Government under sub-section (1) or sub-section (3) shall be adjusted against the tax payable, if any, by the person in relation to the supplies referred to in sub-section (1).
(10) Where any surplus is left after the adjustment under sub-section (9), the amount of such surplus shall either be credited to the Fund or refunded to the person who has borne the incidence of such amount.
(11) The person who has borne the incidence of the amount, may apply for the refund of the same in accordance with the provisions of section 54.
Introduction
Once an amount has been collected from a customer as tax under the Act, section 76 prevents retaining it. Taxability of the underlying supply does not excuse non-payment of the collected amount.
Key takeaways
Immediate payment duty
The collector must pay the represented tax to Government irrespective of whether the supply itself was taxable.
Notice and order
If unpaid, the officer may issue a show-cause notice, consider the response and determine the amount and a possible equal penalty.
Interest and surplus
Section 50 interest runs from collection to payment. The amount is adjusted against tax actually payable; any surplus goes to the Consumer Welfare Fund or the person who bore the amount, as the section provides.
Immediate payment duty
The collector must pay the represented tax to Government irrespective of whether the supply itself was taxable.
Notice and order
If unpaid, the officer may issue a show-cause notice, consider the response and determine the amount and a possible equal penalty.
Interest and surplus
Section 50 interest runs from collection to payment. The amount is adjusted against tax actually payable; any surplus goes to the Consumer Welfare Fund or the person who bore the amount, as the section provides.
Practical checklist
Do
- Identify invoices where an amount was collected as CGST.
- Reconcile collected and deposited amounts.
- Respond to any notice with payment and transaction evidence.
Avoid
- Apply the pre-FY 2024-25 demand route to a later financial year.
Frequently asked questions
Can a supplier keep tax collected on an exempt supply?
No. Section 76(1) requires payment of an amount collected as tax even if that supply was not taxable.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026