General Provisions Relating to Determination of Tax – Section 75 of GST

The CGST Act, 2017, lays down a structured framework for tax administration in India. Among its provisions, Section 75 of the CGST Act plays a crucial role in governing the general provisions related to the determination of tax. It sets forth the procedural rules, timelines, and principles to be followed by tax authorities during the adjudication of tax liabilities, especially in cases of disputes, appeals, and assessments.

This blog explores the provisions of Section 75 in detail, breaking down its sub-sections and clarifying their implications for taxpayers and tax administrators alike.

What is Section 75 of the CGST Act?

Section 75 of the CGST Act outlines the general rules and timelines that tax authorities must follow while determining tax dues, interest, and penalties under Section 73, Section 74, and Section 74A. It acts as a guiding framework for the entire adjudication process under the GST law.

The section is divided into 13 sub-sections, each dealing with specific scenarios such as stays by courts, principles of natural justice, adjudication timelines, and recovery mechanisms.

Exclusion of Time Due to Court Stay (Sub-section 1)

If a court or tribunal stays the issuance of a notice or an order, the duration of such stay is excluded from the time limits prescribed under:

• Section 73(2) and 73(10)

• Section 74(2) and 74(10)

• Section 74A(2) and 74A(7)

This ensures that judicial interventions do not lead to lapses in statutory timelines.

Downgrade from Section 74 to Section 73 (Sub-section 2)

If an appellate body rules that fraud, willful misstatement, or suppression of facts has not been proven, the proper officer must treat the case as one under Section 73 of the CGST Act, which involves lower penalties and shorter timelines.

Modification of Penalty under Section 74A (Sub-section 2A)

Introduced by the Finance Act (No. 2), 2024, this provision allows for the penalty to be downgraded from clause (ii) of Section 74A(5) to clause (i), in cases where fraud or suppression is not established.

Timeline for Issuance of Orders on Direction (Sub-section 3)

When an appellate authority or court directs the issuance of an order, it must be done within two years from the date of communication of that direction.

Right to be Heard (Sub-section 4)

An opportunity for personal hearing must be provided:

• When the taxpayer requests it in writing, or

• When an adverse decision is anticipated

This reinforces the principles of natural justice.

Adjournment of Hearings (Sub-section 5)

The proper officer can grant adjournments if sufficient cause is shown. However, no more than three adjournments can be granted during the proceedings, and reasons must be recorded in writing.

Reasoned Orders (Sub-section 6)

The adjudication order must clearly state:

• Relevant facts of the case

• Basis and rationale for the decision

No Excess Demand (Sub-section 7)

The final tax, interest, and penalty demand must:

• Not exceed the amount mentioned in the show cause notice

• Be based only on the grounds mentioned in the notice

This safeguards taxpayers from arbitrary assessments.

Modification of Interest and Penalty (Sub-section 8)

If the appellate authority modifies the tax amount, the associated interest and penalty will also be revised accordingly.

Interest Liability is Absolute (Sub-section 9)

Interest on short-paid or unpaid tax is payable irrespective of whether it is mentioned in the order.

Deemed Conclusion of Proceedings (Sub-section 10)

Adjudication proceedings are deemed concluded if the order is not issued within:

• The time limit under Section 73(10)

• Section 74(10)

• Section 74A(7)

This ensures timely completion of tax disputes.

Exclusion of Time in Case of Precedent (Sub-section 11)

Where a similar issue is under appeal before a higher authority, the period between decisions is excluded from the limitation period if:

• The previous decision is prejudicial to revenue

• An appeal is pending on the same issue

Recovery of Self-Assessed Tax (Sub-section 12)

Even if a formal adjudication is not done, self-assessed tax shown in returns but not paid can be recovered directly under Section 79 of the CGST Act.

Explanation: The term “self-assessed tax” includes outward supplies disclosed in GSTR-1 (Section 37 of the CGST Act) but omitted in the return filed under GSTR-3B (Section 39 of the CGST Act).

No Double Penalty (Sub-section 13)

If a penalty has already been imposed under Section 73, 74, or 74A, no further penalty can be imposed under any other provision for the same act or omission.

Practical Implications for Taxpayers

1. Ensures procedural fairness – Taxpayers are entitled to a fair hearing and reasoned orders.

2. Prevents excessive demands – Officers cannot go beyond the original show cause notice.

3. Clarity in recovery of dues – Self-assessed liabilities can be recovered without adjudication.

4. Avoids double jeopardy – Only one penalty can be levied for a particular default.

5. Time-bound adjudication – Proceedings must conclude within the prescribed timelines, failing which they are deemed concluded.

Recent Amendments to Section 75

The Finance Act (No. 2) of 2024 introduced important updates:

• Sub-section 2A – Provision regarding reduction of penalty under Section 74A of the CGST Act

• Updated Sub-section 10 – Reworded to clarify deemed conclusion of proceedings

• References to Section 74A – Included in multiple sub-sections to extend its applicability

These changes enhance clarity and reduce litigation by providing defined rules for officers and taxpayers alike.

Conclusion

Section 75 of the CGST Act is a cornerstone provision that ensures fairness, transparency, and efficiency in the determination of tax under GST law. It aligns the adjudication process with judicial principles while also providing safeguards for the revenue. Whether you are a taxpayer facing a notice or a practitioner guiding clients through litigation, understanding Section 75 is crucial for navigating GST compliance confidently.

FAQs

Q1. What happens if the GST department does not issue an order within the prescribed time?
If the order is not issued within the period specified under Section 73(10), 74(10), or 74A(7), the proceedings are deemed concluded.

Q2. Can interest be recovered even if not mentioned in the order?
Yes, as per Section 75(9), interest on short payment or non-payment of tax is recoverable whether or not stated in the order.

Q3. Is it possible to challenge the classification of a notice under Section 74 instead of Section 73?
Yes, and if the appellate authority finds that fraud or suppression was not established, the case will be treated as under Section 73 of the CGST Act.