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Sections 73, 74 and 74A of India’s Central Goods and Services Tax Act, 2017 (CGST Act) are the main determination provisions for tax that was not paid or was short paid, refunds issued in error, and input tax credit wrongly availed or utilised. Sections 73 and 74 apply to financial years up to 2023-24, while section 74A applies from financial year 2024-25 onward. The dividing line between sections 73 and 74 is whether fraud, wilful misstatement or suppression of facts to evade tax is alleged.
What these sections deal with
The three provisions address a specific class of GST liabilities. They are used when the authorities seek to determine:
- GST that was not paid or was paid only in part;
- GST that was refunded even though the refund was not due; or
- input tax credit that was wrongly availed or utilised.
They are determination provisions, not a complete code for every GST disagreement. A dispute about registration, classification, valuation, cancellation, or another subject may be governed by different sections, rules or procedures. These provisions become relevant when the issue is an unpaid or short-paid tax amount, an erroneous refund, or incorrect input tax credit.
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Start by identifying the financial year to which the disputed amount relates. The amended headings of sections 73 and 74 limit them to periods up to financial year 2023-24. Section 74A is the framework for amounts pertaining to financial year 2024-25 onward.
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| Provision | Financial-year scope | Statutory basis | What it determines |
|---|---|---|---|
| Section 73 | Up to FY 2023-24 | Reasons other than fraud, wilful misstatement, or suppression of facts to evade tax | Unpaid or short-paid tax, erroneous refunds, and wrongly availed or utilised input tax credit |
| Section 74 | Up to FY 2023-24 | Fraud, wilful misstatement, or suppression of facts to evade tax | The same broad categories of tax, refund and input-tax-credit issues where those grounds apply |
| Section 74A | FY 2024-25 onward | Any reason; the penalty changes according to whether fraud-related conduct is involved | The specified unpaid or short-paid tax, erroneous refund, or wrongly availed or utilised credit |
The statutory amendment introducing section 74A took effect on 1 November 2024. That commencement date and the financial-year wording should be read together when analysing a particular notice. The relevant year, the period covered by the notice and the legal basis stated by the proper officer should not be assumed from the date on which correspondence was received.
Section 73: the non-fraud route for older periods
Section 73 covers the specified tax, refund and input-tax-credit issues for periods up to FY 2023-24 when the reason is not fraud, wilful misstatement or suppression of facts to evade tax. Its heading describes determination of tax “not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful-misstatement or suppression of facts.”
In practical terms, section 73 is the provision used where the department’s case is that an amount is recoverable but the alleged conduct does not fall into the three fraud-related categories. The provision can therefore cover an inadvertent reporting error, an incorrect calculation, or another non-fraud explanation, provided the underlying issue is one of the tax, refund or credit categories listed in the section.
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The section number does not by itself prove that an error was accidental. It identifies the statutory route chosen for a period up to FY 2023-24 and a case not founded on the specified fraud-related grounds. The facts and the notice’s reasoning still matter.
Section 74: the fraud-related route for older periods
Section 74 addresses the same broad types of liability for periods up to FY 2023-24 where the department alleges fraud, wilful misstatement, or suppression of facts to evade tax.
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Fraud
“Fraud” is one of the grounds expressly named in the section. A notice using section 74 should be read for the factual explanation supporting that allegation, rather than treating the section number as a conclusion that fraud has been established.
Wilful misstatement
Wilful misstatement is also a separate statutory ground. The word “wilful” matters: the provision distinguishes this allegation from a mistake or omission that is not said to involve deliberate misstatement.
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The heading refers to suppression of facts to evade tax. The allegation is therefore not merely that information was absent; it is tied to an asserted intention to evade tax. The exact facts, records and reasoning in the notice determine how that ground is presented in an individual case.
For a period up to FY 2023-24, the choice between sections 73 and 74 is consequently significant. It is not a taxpayer election. It reflects the statutory grounds asserted by the proper officer and must be assessed against the notice and supporting record.
Section 74A: the unified framework from FY 2024-25
Section 74A applies to the specified tax, refund and input-tax-credit issues pertaining to FY 2024-25 onward, whether or not the department alleges fraud-related conduct. Unlike the older pair of provisions, it does not assign different sections according to the reason for the short payment or credit issue. Instead, its penalty provisions distinguish between fraud-related and other cases.
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The opening subsection requires a show-cause notice asking why the specified tax, interest under section 50, and a penalty leviable under the Act or rules should not be paid. It also provides that a notice is not to be issued where the amount for a financial year is below ₹1,000.
How the section 74A procedure is structured
Section 74A sets out a sequence that can be followed when checking a notice or preparing a response.
- Identify the financial year and liability type. Confirm that the notice concerns FY 2024-25 or a later year and that it alleges unpaid or short-paid tax, an erroneous refund, or wrongly availed or utilised input tax credit.
- Check the threshold. The provision says that no notice is to be issued when the amount for the financial year is below ₹1,000. Verify how the notice calculates the amount and which financial year it assigns to the liability.
- Check the limitation reference. The notice is to be issued within 42 months from the due date for furnishing the annual return for the relevant financial year, or within 42 months from the date of an erroneous refund, as applicable.
- Read the grounds and requested payment. The notice should identify the tax, section 50 interest and penalty that the proper officer proposes to recover. Separate the principal tax figure from interest and penalty before reconciling the amount.
- Look for a statement covering other periods. Where one notice covers a period, section 74A permits a statement addressing other periods on the same grounds, subject to the conditions in the provision. Check that any additional period and amount are identified rather than assuming that every year is automatically included.
- Submit a representation. The proper officer must consider the representation before determining the tax, interest and penalty. A response should therefore address the calculation, the documents relied on, the financial year, the legal grounds and any factual correction in the notice.
- Track the order period. Section 74A states that the order is to be issued within 12 months from issuance of the notice, subject to the extension mechanism provided in the section. Preserve the notice, proof of service, submissions and correspondence so the relevant dates can be checked.
These are statutory steps, not a guarantee that a particular notice is valid or invalid. The precise calculation may also depend on the annual-return due date, the date of an erroneous refund, amendments, rules, notifications and the factual service record.
How penalties differ under section 74A
Section 74A keeps a penalty distinction even though it covers both fraud-related and other cases for FY 2024-25 onward.
| Category under section 74A | Penalty stated in the provision | Illustration using tax due |
|---|---|---|
| Non-fraud case | 10% of tax due or ₹10,000, whichever is higher | If tax due is ₹50,000, 10% is ₹5,000, so the stated minimum produces a ₹10,000 penalty. |
| Fraud, wilful misstatement, or suppression of facts to evade tax | An amount equal to the tax due | If tax due is ₹50,000, the stated penalty is ₹50,000. |
The examples are arithmetic illustrations of the statutory amounts, not predictions about a particular assessment. Interest under section 50 and any other amount leviable under the Act or rules are separate from the penalty figures shown in the table.
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Do sections 73 and 74 apply to FY 2024-25?
On the financial-year wording described in the amended Act, sections 73 and 74 apply to periods up to FY 2023-24, while section 74A applies to FY 2024-25 onward. Therefore, a notice concerning FY 2024-25 should be examined under section 74A rather than automatically using section 73 or section 74.
The 1 November 2024 commencement date can create a transitional question because FY 2024-25 began before that date. Do not resolve that question solely by looking at the date of an invoice, return or notice. Check the financial year stated in the notice, the statutory commencement notes, the relevant amendments and the facts to which the demand relates.
A practical checklist for reading a GST demand notice
- Section number: Is the notice issued under section 73, 74 or 74A?
- Financial year: Does the year fall within the section’s stated scope?
- Demand category: Is the allegation unpaid tax, short-paid tax, erroneous refund, or wrongly availed or utilised input tax credit?
- Grounds: If section 74 or the fraud-related part of section 74A is used, what facts are said to establish fraud, wilful misstatement or suppression to evade tax?
- Amount: Are tax, section 50 interest and penalty shown separately, and is the ₹1,000 section 74A threshold relevant?
- Dates: What annual-return due date, erroneous-refund date, notice date and order deadline are stated or implied?
- Periods included: Does a statement extend the matter to other periods, and are those periods identified?
- Evidence: Which returns, invoices, ledgers, credit records, refund applications or correspondence support the calculation?
Because the legal result can turn on the exact record, businesses should preserve the notice and its annexures, reconcile the figures with filed returns and books, and obtain case-specific tax or legal advice where the amount, fraud allegation or limitation calculation is material.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Common misunderstandings
“Section 74 always applies when tax is unpaid.”
No. For older periods, section 74 is tied to fraud, wilful misstatement or suppression of facts to evade tax. A non-fraud case falls within section 73, subject to the facts and the statutory requirements.
“Section 74A is only a fraud provision.”
No. Section 74A covers FY 2024-25 onward regardless of the reason. The fraud-related distinction appears in the penalty treatment, not in a separate section number.
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“The ₹1,000 figure is a general GST exemption.”
No. The stated rule is that a section 74A notice is not to be issued where the amount for a financial year is below ₹1,000. It is a threshold for issuing that notice, not a general exemption from every GST obligation.
“A notice proves the alleged fraud.”
No. A notice sets out the proper officer’s proposed determination and grounds. The officer must consider the taxpayer’s representation before issuing the order, and the outcome depends on the facts, documents and applicable law.
What these provisions do not answer by themselves
Reading the section number alone cannot settle every issue in a dispute. The consolidated Act provides the framework, but a case may also involve rules, notifications, amendments, annual-return due dates, the record of an erroneous refund, the way input tax credit was availed or utilised, and judicial interpretation.
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The most reliable starting point is therefore to map the notice to the correct financial year and liability category, then test the alleged grounds, calculation and statutory dates against the current CGST Act text and the complete case record. A general explanation cannot determine whether a particular demand is within time, whether a penalty is legally sustainable, or whether the evidence establishes fraud-related conduct.
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