74. Determination of tax not paid or short paid or erroneously refunded or input tax credit
wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts.––
(1)
Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or
where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or
suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been
so paid or which has been so short paid or to whom the refund has erroneously been made, or who has
wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the
amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent
to the tax specified in the notice.
(2) The proper officer shall issue the notice under sub-section
(1) at least six months prior to the time
limit specified in sub-section
(10) for issuance of order.
(3) Where a notice has been issued for any period under sub-section
(1), the proper officer may serve
a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit
wrongly availed or utilised for such periods other than those covered under sub-section
(1), on the person
chargeable with tax.
(4) The service of statement under sub-section
(3) shall be deemed to be service of notice under
sub-section
(1) of section 73, subject to the condition that the grounds relied upon in the said statement,
except the ground of fraud, or any wilful-misstatement or suppression of facts to evade tax, for periods
other than those covered under sub-section
(1) are the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of notice under sub-section
(1), pay the
amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of
such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer
and inform the proper officer in writing of such payment.
(6) The proper officer, on receipt of such information, shall not serve any notice under
sub-section
(1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the
rules made thereunder.
(7) Where the proper officer is of the opinion that the amount paid under sub-section
(5) falls short of
the amount actually payable, he shall proceed to issue the notice as provided for in sub-section
(1) in
respect of such amount which falls short of the amount actually payable.
(8) Where any person chargeable with tax under sub-section
(1) pays the said tax along with interest
payable under section 50 and a penalty equivalent to twenty-five per cent. of such tax within thirty days
of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded.
(9) The proper officer shall, after considering the representation, if any, made by the person
chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an
order.
(10) The proper officer shall issue the order under sub-section
(9) within a period of five years from
the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or
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input tax credit wrongly availed or utilised relates to or within five years from the date of erroneous
refund.
(11) Where any person served with an order issued under sub-section
(9) pays the tax along with
interest payable thereon under section 50 and a penalty equivalent to fifty per cent. of such tax within
thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to
be concluded.
Explanation 1.—For the purposes of section 73 and this section,—
(i) the expression “all proceedings in respect of the said notice” shall not include proceedings
under section 132;
(ii) where the notice under the same proceedings is issued to the main person liable to pay tax and
some other persons, and such proceedings against the main person have been concluded under section
73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122, 125,
129 and 130 are deemed to be concluded.
Explanation 2.––For the purposes of this Act, the expression “suppression” shall mean non-declaration
of facts or information which a taxable person is required to declare in the return, statement, report or any
other document furnished under this Act or the rules made thereunder, or failure to furnish any information
on being asked for, in writing, by the proper officer.
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