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GST · Notices & appealsGST demand under Sections 73, 74 and 74A: which applies?
GST demand notices for older years are issued under Section 73 or 74; from FY 2024-25 onwards, a single Section 74A applies with common time limits. Here is how the three provisions differ in time limits and penalties – and how to use early payment to reduce cost.
GST demands for tax not paid, short paid, erroneously refunded, or ITC wrongly availed or utilised arise under:
- Section 73 – non-fraud cases (FY 2017-18 to 2023-24);
- Section 74 – fraud, wilful misstatement or suppression (FY 2017-18 to 2023-24);
- Section 74A – both kinds, for FY 2024-25 onwards (inserted by the Finance Act, 2024).
Comparison
| Point | Section 73 | Section 74 | Section 74A (FY 2024-25 onwards) |
|---|---|---|---|
| Cases | Non-fraud | Fraud / suppression | Both |
| SCN time limit | 3 months before order deadline | 6 months before order deadline | 42 months from due date of annual return |
| Order time limit | 3 years from due date of annual return | 5 years | 12 months from SCN (+6 months) |
| Penalty (non-fraud) | 10% of tax or ₹10,000 | — | 10% of tax or ₹10,000 |
| Penalty (fraud) | — | 100% of tax | 100% of tax |
| Pay before SCN | No penalty | 15% penalty | No penalty (non-fraud) / 15% (fraud) |
| Pay soon after SCN | No penalty (within 60 days) | 25% (within 30 days) | No penalty (non-fraud) / 25% (fraud), within 60 days |
| Pay within 30 days of order | — | 50% | 50% (fraud) |
Time limits worked out
| Year | Annual return due date | Order deadline | SCN deadline |
|---|---|---|---|
| FY 2021-22 (73) | 31 Dec 2022* | 31 Dec 2025* | 30 Sep 2025* |
| FY 2022-23 (73) | 31 Dec 2023 | 31 Dec 2026 | 30 Sep 2026 |
| FY 2023-24 (73) | 31 Dec 2024 | 31 Dec 2027 | 30 Sep 2027 |
| FY 2024-25 (74A) | 31 Dec 2025 | 12 months from SCN | 30 Jun 2029 (42 months) |
*Subject to notified extensions for earlier years. Verify extensions and the actual annual return due date for each year.
Worked example
Example: Sunrise Buildcon (OPC) Pvt Ltd receives an SCN on 1 September 2026 for FY 2022-23 under Section 73 alleging ITC of ₹8,00,000 claimed on invoices of a supplier who did not file returns.
- Limitation: SCN deadline for FY 2022-23 is 30 September 2026 – the notice is within time.
- Options:
- Contest with evidence of genuine purchase (invoices, e-way bills, bank payments).
- If it accepts part (say ₹2,00,000 for invoices without e-way bills), pay ₹2,00,000 + interest by 31 October 2026 (within 60 days) – no penalty on that part.
- If the order confirms ₹6,00,000, penalty is 10% (₹60,000) under Section 73; appeal within 3 months with 10% pre-deposit.
Example 2: For FY 2024-25, a similar notice would be under Section 74A, with an SCN deadline of 30 June 2029 and the same penalty for non-fraud cases.
Fraud allegations
Section 74 (or the fraud limb of 74A) requires the department to establish fraud, wilful misstatement or suppression. Mere mismatch of returns is usually not suppression, especially where information was in returns. Challenge the invocation where facts do not support it – limitation then shrinks to the non-fraud period.
Amnesty under Section 128A
For demands under Section 73 for FY 2017-18 to 2019-20, Section 128A allowed waiver of interest and penalty on payment of full tax by the notified date. Check whether any remaining benefit applies to your case.
Common mistakes
- Not checking limitation.
- Accepting fraud allegations by paying under 74 with penalty when 73 applies.
- Missing the 60-day window.
- Not seeking a personal hearing.
Key takeaway
Identify the year and provision first: 73/74 for up to FY 2023-24, 74A from FY 2024-25. Check limitation, contest fraud allegations where unjustified, and pay accepted amounts early to avoid penalty. Our GST litigation team handles SCN replies and appeals up to GSTAT.
Official references
Provisions discussed (summaries in our Law Library):
- CGST Act, 2017 – Section 73: Demand – non-fraud cases (up to FY 2023-24)
- CGST Act, 2017 – Section 74: Demand – fraud cases (up to FY 2023-24)
- CGST Act, 2017 – Section 74A: Demand – FY 2024-25 onwards
Official sources to verify the current text, notifications and circulars:
Frequently asked questions
Which section applies to a GST demand for FY 2024-25?
Section 74A, which covers both fraud and non-fraud cases from FY 2024-25 onwards. Sections 73 and 74 continue for FY 2017-18 to FY 2023-24.
What is the time limit for a Section 74A notice?
The show cause notice must be issued within 42 months from the due date of the annual return for the year (or date of erroneous refund), and the order within 12 months of the notice, extendable by 6 months.
What is the penalty under Section 74A?
In non-fraud cases, 10% of tax or ₹10,000, whichever is higher; in fraud or suppression cases, 100% of tax, reduced for early payment.
Can penalty be avoided completely?
In non-fraud cases, paying tax and interest before the SCN or within 60 days of it concludes proceedings without penalty.
Does Section 74A apply to erroneous refunds?
Yes. Section 74A covers tax not paid, short paid, erroneously refunded, or ITC wrongly availed or utilised, from FY 2024-25 onwards.
Can the department switch from Section 73 to 74 at the order stage?
Generally no. The order cannot go beyond the grounds in the notice; invoking fraud requires specific allegations in the SCN.
Is interest payable even if penalty is waived?
Yes. Interest under Section 50 is payable on delayed tax regardless of penalty.
This article is general information on the law as on 10 November 2026, written for educational purposes. It is not professional advice for your case. Section numbers under the Income-tax Act, 2025 should be confirmed with the official section mapping on the Income Tax Department website before use in filings.
Have a tax, GST or business question?
Call, WhatsApp or email CA Dilbagh Singh and team, from Delhi, anywhere in India or abroad.