Sections 73 and 74 of the CGST Act cover tax demands for FY 2023-24 and earlier; section 74A covers FY 2024-25 onwards. Section 73 is for tax missed for any reason other than fraud, wilful misstatement or suppression of facts to evade tax, and section 74 for tax missed for one of those reasons; section 74A takes both and moves the fraud question to the penalty (10 per cent of the tax or ₹10,000, whichever is higher, without fraud; equal to the tax with it). The section on your show cause notice (SCN) therefore sets your penalty and your discount window: 30 days under section 73 or 74, 60 days under section 74A.
In this article
- Which section applies to which financial year?
- What is the difference between section 73, 74 and 74A?
- What does each section cost? A ₹10 lakh example
- What is DRC-01A, and must the officer send it first?
- When may an officer use section 74? What CBIC says
- What do High Courts say when section 74 is invoked without a specific allegation?
- What happens if the fraud charge is not proved?
- How can a wrong choice of section be challenged?
- Frequently asked questions
- Sources
Which section applies to which financial year?
Sections 73(12) and 74(12) apply to tax "pertaining to the period up to Financial Year 2023-24"; section 74A(12) to tax "pertaining to the Financial Year 2024-25 onwards". The Finance (No. 2) Act, 2024 inserted section 74A (its section 138), and Notification 17/2024-Central Tax of 27 September 2024 brought it into force on 1 November 2024. State GST Acts carry matching sections 73 and 74. Whether, and from when, your State's Act has section 74A is for that Act, so check it.
What is the difference between section 73, 74 and 74A?
| Section 73 | Section 74 | Section 74A | |
|---|---|---|---|
| Years | Up to FY 2023-24 (73(12)) | Up to FY 2023-24 (74(12)) | FY 2024-25 onwards (74A(12)) |
| Trigger | Any reason other than fraud, wilful misstatement or suppression of facts to evade tax (73(1)) | Fraud, wilful misstatement or suppression of facts to evade tax (74(1)) | Any reason (74A(1)); the penalty turns on the fraud test (74A(5)) |
| Penalty on an order | 10% of tax or ₹10,000, whichever is higher (73(9)) | Equal to the tax (74(1)) | No fraud: as section 73 (74A(5)(i)). Fraud: equal to the tax (74A(5)(ii)) |
| Pay before the notice | Tax and interest; no penalty (73(5), (6)) | Tax, interest and 15% (74(5), (6)) | No fraud: tax and interest (74A(8)(i)). Fraud: and 15% (74A(9)(i)) |
| Pay after the notice | Within 30 days: tax and interest (73(8)) | Within 30 days: and 25% (74(8)) | Within 60 days. No fraud: tax and interest (74A(8)(ii)). Fraud: and 25% (74A(9)(ii)) |
| Pay after the order | No window | Within 30 days of communication: and 50% (74(11)) | No fraud: none. Fraud: within 60 days, and 50% (74A(9)(iii)) |
| Time limits | Order within 3 years of the annual return's due date; notice 3 months before (73(2), (10)) | 5 years; notice 6 months before (74(2), (10)) | Notice within 42 months; order within 12 months of it, plus up to 6 (74A(2), (7)) |
CGST Act on the CBIC tax information portal (Nira's copy is as at 1 April 2026). Interest under section 50 is extra in every case. Dates for each year are on the time-limit calculator.
One section, two penalty tracks. Section 74A drops the fraud wording from the trigger, so the notice period is 42 months either way; the fraud question now sets only the penalty. "Suppression" includes "non-declaration of facts or information which a taxable person is required to declare" in a return or other document (Explanation 2 to section 74A). Sections 73(11) and 74A(11) keep the non-fraud penalty payable, even inside a no-penalty window, on self-assessed or collected tax unpaid 30 days past its due date.
What does each section cost? A ₹10 lakh example
Tax plus penalty on ₹10 lakh of tax; interest is extra.
| When it is paid | Section 73, or 74A without fraud | Section 74, or 74A with fraud |
|---|---|---|
| Before the notice | ₹10 lakh | ₹11.5 lakh |
| Inside the window after the notice | ₹10 lakh | ₹12.5 lakh |
| Inside the window after the order | none | ₹15 lakh |
| Order passed, nothing paid | ₹11 lakh | ₹20 lakh |
The windows are 30 days under sections 73 and 74, 60 days under section 74A.
A fraud label on the same demand costs ₹2.5 lakh more inside the window, and ₹9 lakh more if the order is passed and nothing is paid. Paying in a window concludes "all proceedings in respect of the said notice", though not prosecution under section 132 (Explanation 1 to sections 74 and 74A). Payment is intimated in FORM GST DRC-03 and, for the windows after the notice, the case is closed in FORM GST DRC-05 (rule 142(2), (3)).
Interest is payable whether or not the order mentions it (s.75(9)): 18 per cent a year from the day after the tax was due (s.50(1), (2)), and 24 per cent a year on input tax credit wrongly availed and utilised, counted from the date of utilisation (s.50(3); rule 88B(3); Notification 13/2017-Central Tax).
What is DRC-01A, and must the officer send it first?
FORM GST DRC-01A is the pre-notice intimation: Part A states the tax, interest and penalty the officer has worked out, Part B is your payment or reply, Part C his acceptance (rule 142(1A), (2A)). Whether it must come first has changed. Notification 49/2019-Central Tax (9 October 2019) inserted rule 142(1A) saying the officer "shall" communicate; Notification 79/2020-Central Tax (15 October 2020) replaced "shall" with "may". The rule now reads "The proper officer may, before service of Notice ... communicate the details", and has covered section 74A from 1 November 2024 (Notification 20/2024-Central Tax). In Telangana the Division Bench in Goldstone Infra (WP 1498/2026, 27 January 2026) held that a missed DRC-01A, even for a period when the rule said "shall", is judged by prejudice; a three-judge Bench recorded that view on 30 September 2026 and left it there (Gudla Vanaja, W.P. 20397 of 2025 and batch, para 124). That is Telangana's position only.
When may an officer use section 74? What CBIC says
CBIC Instruction 05/2023-GST of 13 December 2023 followed industry complaints, in secondment cases, of officers "mechanically invoking extended period of limitation under section 74(1)". Its paragraph 3.3 is general: section 74(1) "cannot be invoked merely on account of non-payment of GST, without specific element of fraud or wilful mis-statement or suppression of facts to evade tax", and "such evidence should also be made a part of the show cause notice" (CBIC portal). It is addressed to CBIC's field officers.
On 19 August 2026 the Supreme Court said the same in M/s G.R. Infra Projects Limited v. State of Madhya Pradesh (Civil Appeal No. 11277 of 2026, signed order). The allegations "should emanate from the notice itself. It cannot be a mechanical use of the words ‘fraud, willful misstatement or suppression of facts’" (para 10), and a counter affidavit cannot supply them (para 5). The calculator page covers its limitation side.
What do High Courts say when section 74 is invoked without a specific allegation?
Each binds the State's authorities and persuades elsewhere (a single judge's ruling may differ from another bench's).
| Court and where it binds | Case and date | Held | The court's words (paragraph) |
|---|---|---|---|
| Jharkhand, Division Bench. Binds Jharkhand. | NKAS Services v. State of Jharkhand, W.P.(T) 2444/2021, 6 Oct 2021 | Notice that did not say which ground it relied on quashed. | "the specific ingredients enumerated thereunder have to be clearly asserted in the notice so that the noticee has an opportunity to explain and defend himself" (para 16) |
| Allahabad, single judge. Binds Uttar Pradesh. | Safecon Lifescience v. Additional Commissioner, Writ Tax 389/2023, 9 Sep 2025 | Orders under section 74 of the UP GST Act quashed. | "neither any finding with regard to fraud has been noticed nor mis-statement nor suppression of fact has been recorded at any stage" (para 17) |
| Madras, single judge. Binds Tamil Nadu. | MRF Ltd v. Additional Director, DGGI, WP 15215/2022, 28 Nov 2025 | Notice quashed: tax already paid with interest; at worst section 73. | "If the aspects of fraud, misstatement or suppression of facts were not established while issuing the show cause notice, the same would be considered as issued without fulfilling the ingredients of Section 74 of the Act" (para 12) |
| Orissa, Division Bench. Binds Odisha. | Babamani Roadways v. Commissioner, GST and Central Excise, WP(C) 12682 and 12686/2025, 8 Apr 2026 | Order quashed: a DGGI alert against the supplier, no inquiry into the recipient. | "strong and tangible material must be available on record to suggest that the petitioner had the conscious and active involvement in such dubious transactions" (para 8.9) |
| Madhya Pradesh, Division Bench. Binds Madhya Pradesh. | G.R. Infra Projects v. State of Madhya Pradesh, WP 40186/2026, 14 Oct 2026 | Notice of 25 August 2026 (another year, same defect) quashed on the Supreme Court's reasoning; liberty to issue a fresh notice (paras 11 to 13). | "The specific allegations and material must be disclosed in the show-cause notice itself to bring it within the scope of Section 74 of the Act" (para 10) |
Jharkhand and Allahabad: under those States' GST Acts.
The other side. Not every court interferes. The Rajasthan High Court (Division Bench, Power and Instrumentation (Guj) Ltd, CW 7766/2024, 8 July 2024, before the Supreme Court's order; para 8) held that suppression "is an issue of fact and not of law" and left the petitioner to reply. The Delhi High Court (Division Bench, Transcorp International, W.P.(C) 5893/2025, 14 September 2026), on an order-in-original of 24 January 2025, recorded G.R. Infra (para 7) but declined "to express any final opinion on whether the allegations contained in the SCN satisfy the requirements of Section 74" (para 10), and gave four weeks to appeal under section 107 (para 14).
What happens if the fraud charge is not proved?
- Section 75(2). If an appellate authority, Tribunal or court concludes that a section 74 notice is not sustainable because "the charges of fraud or any wilful-misstatement or suppression of facts to evade tax has not been established", the officer determines the tax "deeming as if the notice were issued under sub-section (1) of section 73". For section 74A notices, section 75(2A) only lowers the penalty to the non-fraud rate (Circular 254/11/2025-GST, para 6, restates section 75(2) for section 74 only).
- Time still counts. CBIC Circular 185/17/2022-GST (27 December 2022) says the demand can be redone only if the section 74 notice came within 2 years and 9 months of the annual return's due date; else "the entire proceeding shall have to be dropped, being hit by the limitation of time as specified in section 73". We found no ruling on this reading.
- Scope. "no demand shall be confirmed on the grounds other than the grounds specified in the notice" (s.75(7)), so an order cannot rest on a fraud allegation the notice did not make. A hearing must be given on a written request (s.75(4)).
How can a wrong choice of section be challenged?
- Read the notice for the allegation: what was suppressed, in which document, and why intent to evade tax is inferred. Bare words fall short of Instruction 05/2023-GST para 3.3 and the Supreme Court's G.R. Infra order, para 10.
- Reply in FORM GST DRC-06 (rule 142(4)), taking the section 74 point and, in the alternative, section 73 and its time limit; ask in writing for a hearing. The payment windows run from the issue of the notice and may close first.
- Writs have succeeded in the five States above; Rajasthan and Delhi sent petitioners to reply or to appeal. An order can be appealed under section 107 within three months of its communication.
Frequently asked questions
What is the difference between section 73 and section 74 of the CGST Act?
Section 73 applies where tax was missed for any reason other than fraud, wilful misstatement or suppression of facts to evade tax; section 74 applies where it was missed for one of those reasons. Section 73's penalty is 10 per cent (or ₹10,000, if higher), nil if paid within 30 days of the notice; section 74's equals the tax, cut to 15, 25 or 50 per cent if paid in time.
What is section 74A of the CGST Act, and what is the penalty?
Section 74A replaces sections 73 and 74 for FY 2024-25 onwards. Without fraud, the penalty is nil if tax and interest are paid before the notice or within 60 days of it, otherwise 10 per cent or ₹10,000, whichever is higher. With fraud: 15, 25 or 50 per cent if paid before the notice, within 60 days of it, or within 60 days of the order; 100 per cent if nothing is paid.
Can an officer issue a section 74 notice just because tax was not paid?
No. CBIC Instruction 05/2023-GST says section 74(1) "cannot be invoked merely on account of non-payment of GST", and the Supreme Court held on 19 August 2026 that the allegations must emanate from the notice itself.
Is a DRC-01A compulsory before a show cause notice?
Not on the rule's present wording. Rule 142(1A) said "shall" from 9 October 2019 and has said "may" since 15 October 2020. In Telangana, a Division Bench held on 27 January 2026 that a missed DRC-01A is judged on prejudice to the taxpayer; a three-judge Bench recorded this on 30 September 2026.
Limits. Nira does not yet hold the Supreme Court's order of 19 August 2026, which we read from the signed order, and its High Court coverage is partial; statute text is as at 1 April 2026 (rule 142: 1 February 2026).
Sources
- Statute CGST Act s.73, s.74, s.74A, s.75, s.50; rule 142.
- CBIC Central Tax Notifications 17/2024, 20/2024, 49/2019, 79/2020, 13/2017; Circulars 185/17/2022-GST and 254/11/2025-GST.
Check which section your notice is under
Paste the notice. Nira reads the section, year and allegation, and brings the court's own words for your State. Ask your first question now, no account needed.