Section 74 invoked and SCN issued for payment of Tax under IGST instead of CGST & SGST

[Venkata K]

Dear Expert

Tax authority has issued SCN under section 74 for payment of Tax under IGST instead of CGST and SGST for the transaction pertaining to FY 2018-19.  Whether payment of tax in wrong head is fraud and will full misstatement and can we contest the issue. 

 

AI Summary

Taxpayer cannot face Section 74 proceedings for paying IGST instead of CGST/SGST without fraud evidence A taxpayer received a show cause notice under Section 74 of GST law for paying tax under IGST instead of CGST and SGST for transactions in FY 2018-19. Legal experts clarified that Section 74 requires proof of fraud, willful misstatement, or suppression of facts to evade tax. Mere payment under wrong tax head does not constitute fraud or tax evasion. The discussion referenced Instruction No. 05/2023 GST stating Section 74 cannot be invoked without specific evidence of fraud. A Karnataka High Court case was cited where proceedings were converted from Section 74 to Section 73 as no suppression of facts was found. Experts noted that since taxpayers gain no benefit from wrong tax head payments and GST law provides no interest on such errors, no fraud can be established, making the extended limitation period under Section 74 inappropriate.