TaxTMI 
TaxTMI 
TaxTMI 
The legislature at the time of drafting the CGST Act have perceived well the attitude of the GST officials and put several sub sections under section 75 for safeguarding the interest of the taxpayer. Let us examine few such sub sections in this article. It would be of paramount importance to know all the beneficial provisions and the rulings of the jurisdictional high courts on section 75 so as to ensure that the benefits reach all connected therewith.
Sub section 2 is in favor of the taxpayer when the appellate authority or appellate tribunal concludes that section 74 is not applicable. The demand comes down drastically covering only the period that is permissible under section 73.
Section 74A (5) provides for lesser penalty of 10% of GST or 10,000 whichever is higher for the period commencing from 01/04/2024 in non-fraud cases. The penalty would be 100 % of GST in case of fraud or willful -misstatement or suppression from 01/04/2024 onwards. The newly inserted sub section 2A of section 75 is in taxpayer favor when the appellate authority or appellate tribunal concludes that the charges of fraud etc. are non-sustainable by way of suitable reduction in penalty.
Sub section 4 is the most important one as it pertains to natural justice. Accordingly, personal hearing is a must in all cases where the order is adverse against the taxpayer. Sub section 5 of section 75 provides for a maximum of three adjournments, provided sufficient cause exists.
Sub section 7 is again a highly beneficial one as it restricts the demand that could be raised by way of adjudication order to the maximum extent of demand proposed in the show cause notice.
Incidentally, there are favorable orders from almost all high courts in India on sub sections 4 as well as 7 which were covered in earlier articles.
Sub section 8 provides for suitable reduction in interest as well as penalty when the GST amount in order is reduced by the competent authority or tribunal or court.
Sub section 9 is also beneficial to taxpayer as it is mandatory under sub section 7 of section 75 to raise and quantify interest up to the date of Show Cause Notice to take advantage of sub section 9 which provides that interest on GST is payable even when it is not mentioned in the order.
Thus sub sections 7 and 9 are on two different perspectives and sub section 7 is highly in favor of taxpayer. It is high time for all concerned to take stock of all orders passed in the recent past to check whether applicable interest as demanded in the adjudication order is properly quantified in the show cause notice.
The Allahabad High Court in writ tax number 161/2026 on 17/02/2026 passed a very good order in the case of Sanjay Constructions Vs State of U P where it was held as below:
8. Upon a perusal of the order passed under Section 73(9) of the Act, 2017, it is clear that the interest liability is for a period starting from 2020-21, which was very well known to the authorities when they issued the show cause notice on November 29, 2024. Having not quantified the amount of interest till the date of issue of the show cause notice would definitely be in contravention of the provisions of Section 75(7) of the Act, 2017.
9. The contention of the GST authorities that Section 75(9) of Act, 2017 would apply and the interest on the short paid tax would be payable even though not specified in the order has no application in the present case, as it deals with the situation wherein the interest liability is not quantified in the order passed and not in the show cause notice.
10. In light of the above reasoning, we are of the view that the impugned order and the impugned show cause notice cannot stand and are accordingly quashed and set aside.
The newly substituted sub section 10 is also highly beneficial in the new section 74A as well as any order if not passed within time frame under 73 or 74 or 74A is impermissible as proceedings are deemed to conclude if order is not issued in time.
It may be concluded that several sub sections of section 75 are highly in favour of taxpayer which each and every taxpayer is expected to know to take full advantage of the law. It may be incidentally observed that several GST officials pass adjudication orders in gross violation of Section 74 as well as section 75 in many cases and the required relief is absolutely possible at GSTAT in case appeal is filed in time under section 107.
It is high time for all tax professionals as well as taxpayers to review all old cases on the above lines to take advantage of appeal remedy before GSTAT latest by 30/06/2026.