Notice Under Section 74 of the CGST ACt

[Rajendra Prasad]

Dear Sir,

A notice was issued u/s 74 of the CGST Act to pay tax at 12% instead of 5%. If I pay the tax now , can my customer get the ITC based on my debit note .

AI Summary

Clarification: No Input Tax Credit on 12% Tax Payment Under Section 74 of CGST Act Due to Section 17(5) Restrictions. A query was raised regarding a notice under Section 74 of the CGST Act, requiring payment of tax at 12% instead of 5%, and whether the customer could claim Input Tax Credit (ITC) based on a debit note. It was clarified that ITC cannot be claimed as it is restricted by Section 17(5) of the CGST Act, which prohibits ITC on taxes paid under sections 74, 129, and 130. Even if the tax is paid before an order is issued, the right to claim ITC is forfeited once a show cause notice is issued.