Exploring Section 74 Of The CGST Act 2017: Understanding Tax Irregularities Arising From Fraud Or Misstatement
- IJLLR Journal
- 16 hours ago
- 2 min read
Vinay Sharma, BA LLB (H), Amity Law School, Noida
ABSTRACT
The Central Goods and Services Tax (CGST) Act, 2017 was introduced to bring uniformity to India’s indirect tax system. Among its important provisions, Section 74 plays a key role in handling cases where taxes are not paid correctly due to fraud, intentional misstatements, or hidden facts.
This section gives the tax department the authority to investigate and identify situations where taxes have either not been paid, underpaid, wrongly refunded, or where input tax credit (ITC) has been wrongly claimed or used because of dishonest actions. It serves as a tool to prevent tax evasion and to keep the GST system transparent and trustworthy.
The process under Section 74 begins when the department issues a show- cause notice to the taxpayer. This notice explains the reasons for the suspected tax issue and gives the taxpayer a chance to respond. After this, the department carries out a detailed review, taking into account the evidence and all related details. Importantly, the law mentions that the whole process must be completed within a certain time limit, ensuring timely decisions.
Section 74 also respects the principles of natural justice, which means taxpayers have the right to be heard and defend themselves before any final decision is made. To prevent misuse of power, the section includes certain protections to ensure that taxpayers are not treated unfairly. It allows individuals to explain their side, especially if the issue arose from a genuine mistake or misunderstanding.
However, some experts believe that this section could be misused or wrongly applied, which might cause problems for honest taxpayers. Therefore, the real challenge lies in finding the right balance between strict tax enforcement and protecting taxpayer rights.
Keywords: GST Act, Fraud, Misstatement, Section 74, Input Tax Credit.
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