Demand by reason of fraud or any willful-misstatement or suppression of facts pertaining to the period up to Financial Year 2023-24 [Section 74]

Demand for tax due to fraud or suppression requires show cause notice, with staged penalties and time bound adjudication.

Demand proceedings for tax evasion based on fraud, willful misstatement or suppression permit a proper officer to issue a show cause notice for unpaid, short paid, or erroneously refunded tax or wrongly availed input tax credit; notices must be issued at least six months before the adjudication time limit and adjudication must conclude within five years from the annual return due date or erroneous refund date, with deemed conclusion if no order is issued. Voluntary pre notice payment attracts a 15% penalty, post notice payment within thirty days attracts a 25% penalty, and post adjudication payment within thirty days attracts a 50% penalty, subject to procedural rules and specified notifications.