Insertion of Section 74A in various Sections w.e.f. November 01, 2024
By: Admin
October 09, 2024
Categories: 54th GST Council
4 Min Read
Background:
The 53rd GST Council Meeting, held on June 22, 2024, recommended amendments to Section 73 and Section 74 of the CGST Act and the insertion of a new Section 74A. This section introduces a common time limit for the issuance of demand notices and orders, whether or not fraud, suppression, or willful misstatement is involved.
Previously, different time limits were prescribed for cases involving fraud or willful misstatement and cases where such charges were not involved. To simplify this, the GST Council recommended a common time limit for demands from FY 2024-25 onwards, regardless of the nature of the case.
Additionally, the time limit for taxpayers to benefit from a reduced penalty by paying the demanded tax along with interest has been extended from 30 days to 60 days under Section 74A.
Key Changes:
Based on the GST Council’s recommendations, Section 74A has been introduced to cover the determination of tax not paid, short-paid, erroneously refunded, or input tax credit wrongly availed or utilized for any reason from FY 2024-25 onwards. This amendment standardizes the time limits for issuing show cause notices and passing orders in both fraud and non-fraud cases.
For periods up to FY 2023-24, Sections 73 and 74 of the CGST Act will continue to apply, but Section 74A will govern proceedings for tax periods from FY 2024-25.
The CBIC, through Notification No. 17/2024–Central Tax dated September 27, 2024, announced the commencement dates for provisions of the Finance (No. 2) Act, 2024, with Section 138 of the Finance Act introducing Section 74A into the CGST Act from November 01, 2024.
Changes in Various Sections (w.e.f. November 01, 2024):
The CBIC, through Notification No. 20/2024 – Central Tax dated October 08, 2024, notified the insertion of Section 74A in various sections of the CGST Act:
In Rule 88B, sub-rule (1), after the words “or section 74”, the insertion of “or section 74A” is made.
In Rule 88D, sub-rule (3), after “or section 74”, the words “or section 74A” are added.
In Rule 96B, sub-rule (1), for “section 73 or 74”, the phrase “section 73 or section 74 or section 74A” is substituted.
In Rule 142, various sub-rules (1), (1A), (2), (2B), (3), (4), and (5) are updated to include “or section 74A”.
Amendment to Forms:
The CBIC also amended Form GST DRC-01A as follows:
In the heading, after “73(5)/74(5)”, “/74A(8)/74A(9)” is inserted.
In Part A, after references to “section 73(5) / 74(5)”, “/74A(8)/74A(9)” is inserted.
In Part B, similar insertions are made to reflect Section 74A.
Our Comments:
The introduction of Section 74A simplifies and unifies the tax demand notice process by establishing a common time limit for both fraud and non-fraud cases. This change streamlines tax demands from FY 2024-25 onwards, reducing procedural complexities and providing clarity to taxpayers. Moreover, extending the time limit from 30 to 60 days for availing reduced penalties offers additional flexibility.
The procedural updates to various rules and forms ensure smooth implementation of Section 74A, making compliance more predictable and standardized.
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