Show Cause Notice uls 74 of GST Act: An In- Depth Analysis

Section 74 of the Central Goods and Service Tax Act ( GST ), 2017 defines the adjudication notice under the Goods and Service Tax Act. Provisions in respect of raising show cause notice ( SCN ) demanding tax, interest and penalty have been made in section 74 of the act.

Under any of the following situations, the appropriate official may issue an adjudication notice under GST to the registered person.

  • In the event that taxes are unpaid,
  • Some taxes are not paid in full; some refunds are issued incorrectly;
  • It is improper to claim or use input tax credit.

Time limit for issue of the determination order

As per Section 74(10), the Proper Officer is required to pass the order within five years from the due date of filing of Annual Return under Section 44 for the year to which the short payment or non-payment or input tax credit wrongly availed or utilised relates or date of erroneous refund. Time limit for issue of SCN: The Proper Officer is required to issue notice at least six months prior to the time limit specified under Section 74(10) for issuance of an order. [Sub-section 2 of Section 74].

Right of Taxable person during the adjudication

The right to provide all necessary evidence: The taxable person has the fundamental right to present all pertinent information in support of their claim when they file their defense reply. The right to have a voice: Before issuing an adjudication order, the taxable person must be given the chance to be heard. Should the same chance not be given, the natural justice principle will be violated. Entitlement to a speaking order: There should be a speaking order as soon as the adjudicating authority passes the order.

Ability to file an appeal: An appeal may be filed if the taxed person feels that the adjudicating authority’s decision has wronged them.

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