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Circular No. 185/17/2022-GST
F. No. CBIC-20001/2/2022 - GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
*****
New Delhi, Dated the 27
th
December, 2022
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners
/Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)
Subject: Clarification with regard to applicability of provisions of section 75(2) of
Central Goods and Services Tax Act, 2017 and its effect on limitation -reg.
Madam/Sir,
Attention is invited to sub-section (2) of section 75 of Central Goods and Services
Tax Act, 2017 (hereinafter referred to as “CGST Act”) which provides that in cases
where the appellate authority or appellate tribunal or court concludes that the notice
issued by proper officer under sub-section (1) of section 74 is not sustainable for reason
that the charges of fraud or any willful-misstatement or suppression of facts to evade tax
have not been established against the person to whom such notice was issued (hereinafter
called as “noticee”), then the proper officer shall determine the tax payable by the
noticee, deeming as if the notice was issued under sub-section (1) of section 73.
2. Doubts have been raised by the field formations seeking clarification regarding
the time limit within which the proper officer is required to re-determine the amount of
tax payable considering notice to be issued under sub-section (1) of section 73, specially
in cases where time limit for issuance of order as per sub-section (10) of section 73 has
already been over. Further, doubts have also been expressed regarding the methodology
for computation of such amount payable by the noticee, deeming the notice to be issued
under sub-section (1) of section 73.
3. In order to clarify the issue and to ensure uniformity in the implementation
of the provisions of law across the field formations, the Board, in exercise of its powers
conferred by section 168(1) of the CGST Act, hereby clarifies the issues as under:
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S.No. Issue Clarification
1. In some of the cases where the show
cause notice has been issued by the
proper officer to a noticee under
sub-section (1) of section 74 of
CGST Act for demand of tax not
paid/ short paid or erroneous refund
or input tax credit wrongly availed
or utilized, the appellate authority or
appellate tribunal or the court
concludes that the said notice is not
sustainable under sub-section (1) of
section 74 of CGST Act for the
reason that the charges of fraud or
any willful-misstatement or
suppression of facts to evade tax
have not been established against
the noticee and directs the proper
officer to re-determine the amount
of tax payable by the noticee,
deeming the notice to have been
issued under sub-section (1) of
section 73 of CGST Act, in
accordance with the provisions of
sub-section (2) of section 75 of
CGST Act. What would be the time
period for re-determination of the
tax, interest and penalty payable by
the noticee in such cases?
• Sub-section (3) of section 75 of CGST Act
provides that an order, required to be issued in
pursuance of the directions of the appellate
authority or appellate tribunal or the court, has
to be issued within two years from the date of
communication of the said direction.
• Accordingly, in cases where any direction is
issued by the appellate authority or appellate
tribunal or the court to re-determine the
amount of tax payable by the noticee by
deeming the notice to have been issued under
sub-section (1) of section 73 of CGST Act in
accordance with the provisions of sub-section
(2) of section 75 of the said Act, the proper
officer is required to issue the order of
redetermination of tax, interest and penalty
payable within the time limit as specified in
under sub-section (3) of section 75 of the said
Act, i.e. within a period of two years from
the date of communication of the said
direction by appellate authority or
appellate tribunal or the court, as the case
may be.
2. How the amount payable by the
noticee, deeming the notice to have
been issued under sub-section (1) of
section 73, shall be re-computed/ re-
determined by the proper officer as
per provisions of sub-section (2) of
section 75?
• In cases where the amount of tax, interest and
penalty payable by the noticee is required to
be re-determined by the proper officer in terms
of sub-section (2) of section 75 of CGST Act,
the demand would have to be re-determined
keeping in consideration the provisions of
sub-section (2) of section 73, read with sub-
section (10) of section 73 of CGST Act.
• Sub-section (1) of section 73 of CGST Act
provides for issuance of a show cause notice
by the proper officer for tax not paid or short
paid or erroneously refunded, or where input
tax credit has been wrongly availed or utilized,
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in cases which do not involve fraud or wilful
misstatement or suppression of facts to evade
tax. Sub-section (2) of section 73 of CGST
Act provides that such show cause notice shall
be issued at least 3 months prior to the time
limit specified in sub-section 10 of section 73
for issuance of order. As per sub-section (9)
of section 73 of CGST Act, the proper officer
is required to determine the tax, interest and
penalty due from the noticee and issue an
order. As per sub-section (10) of section 73
of CGST Act, an order under sub-section (9)
of section 73 has to be issued by the proper
officer within three years from the due date
for furnishing of annual return for the financial
year in respect of which tax has not been paid
or short paid or input tax credit has been
wrongly availed or utilized or from the date of
erroneous refund.
• It transpires from a combined reading of these
provisions that in cases which do not involve
fraud or willful-misstatement or suppression
of facts to evade payment of tax, the show
cause notice in terms of sub-section (1) of
section 73 of CGST Act has to be issued
within 2 years and 9 months from the due
date of furnishing of annual return for the
financial year to which such tax not paid or
short paid or input tax credit wrongly availed
or utilized relates, or within 2 years and 9
months from the date of erroneous refund.
• Therefore, in cases where the proper officer
has to re-determine the amount of tax, interest
and penalty payable deeming the notice to
have been issued under sub-section (1) of
section 73 of CGST Act in terms of sub-
section (2) of section 75 of the said Act, the
same can be re-determined for so much
amount of tax short paid or not paid, or input
tax credit wrongly availed or utilized or that of
erroneous refund, in respect of which show
cause notice was issued within the time limit
as specified under sub-section (2) of section
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73 read with sub-section (10) of section 73
of CGST Act. Thus, only the amount of tax
short paid or not paid, or input tax credit
wrongly availed or utilized, along with interest
and penalty payable, in terms of section 73 of
CGST Act relating to such financial years can
be re-determined, where show cause notice
was issued within 2 years and 9 months
from the due date of furnishing of annual
return for the respective financial year.
Similarly, the amount of tax payable on
account of erroneous refund along with
interest and penalty payable can be re-
determined only where show cause notice
was issued within 2 years and 9 months
from the date of erroneous refund.
• In case, where the show cause notice under
sub-section (1) of section 74 was issued for
tax short paid or tax not paid or wrongly
availed or utilized input tax credit beyond a
period of 2 years and 9 months from the due
date of furnishing of the annual return for the
financial year to which such demand relates
to, and the appellate authority concludes that
the notice is not sustainable under sub-section
(1) of section 74 of CGST Act thereby
deeming the notice to have been issued under
sub-section (1) of section 73, the entire
proceeding shall have to be dropped, being hit
by the limitation of time as specified in section
73. Similarly, where show cause notice under
sub-section (1) of section 74 of CGST Act was
issued for erroneous refund beyond a period of
2 years and 9 months from the date of
erroneous refund, the entire proceeding shall
have to be dropped.
• In cases, where the show cause in terms of
sub-section (1) of section 74 of CGST Act
was issued for tax short paid or not paid tax or
wrongly availed or utilized input tax credit or
on account of erroneous refund within 2 years
and 9 months from the due date of furnishing
of the annual return for the said financial year,
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to which such demand relates to, or from the
date of erroneous refund, as the case may be,
the entire amount of the said demand in the
show cause notice would be covered under re-
determined amount.
• Where the show cause notice under sub-
section (1) of section 74 was issued for
multiple financial years, and where notice had
been issued before the expiry of the time
period as per sub-section (2) of section 73 for
one financial year but after the expiry of the
said due date for the other financial years, then
the amount payable in terms of section 73
shall be re-determined only in respect of that
financial year for which show cause notice
was issued before the expiry of the time period
as specified in sub-section (2) of section 73.
4. It is requested that suitable trade notices may be issued to publicize the contents
of this Circular.
5. Difficulty, if any, in implementation of this Circular may please be brought to the
notice of the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
