Section 73 of CGST Act, 2017 : Section 73: 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

Explanation using Example

Imagine a business owner, Mr. Sharma, who runs a manufacturing company. After filing his GST returns for the financial year, he realizes that he has underreported his sales, leading to a lower GST payment than what was actually due. This was an honest mistake and not an attempt to evade taxes.

The proper GST officer reviews Mr. Sharma's returns, notices the discrepancy, and believes that tax has been short paid. As per Section 73(1) of the CGST Act, 2017, the officer issues a notice to Mr. Sharma asking him to show cause why he should not pay the additional tax due along with interest and any applicable penalty.

Mr. Sharma receives the notice well before the three-year deadline as stated in Section 73(10), meaning the officer complied with Section 73(2) by issuing the notice timely.

Upon receiving the notice, Mr. Sharma calculates the additional tax due and pays it along with the interest under Section 50. He informs the officer of this payment as per Section 73(5). Consequently, the officer decides not to serve any further notice or statement for the tax paid, as per Section 73(6).

However, the officer determines that the amount paid by Mr. Sharma is still less than what is actually due. As a result, under Section 73(7), the officer issues a notice for the shortfall.

Mr. Sharma then pays the remaining tax and interest within thirty days of the show cause notice, and as per Section 73(8), he is not liable for any penalty, and the proceedings are concluded.

If Mr. Sharma had not paid the tax and interest within thirty days, the officer would have proceeded under Section 73(9) to determine the final amount due including a penalty. The order would have been issued within the three-year time limit as per Section 73(10).

Lastly, if Mr. Sharma had self-assessed his tax incorrectly and did not pay the due tax within thirty days of its due date, he would still be liable for a penalty as mentioned in Section 73(11), despite the payment made after receiving the notice.