Adjudication Notice Under GST
CA Poonam Gandhi
September 6, 2023

Accordingly, adjudication notice means a notice issued by the ‘proper officer’ either section 73 and section 74 under CGST act.

In the present article, the adjudication notice as well as the adjudication procedure involved under the GST law is briefly discussed in the form of Frequently Asked Question for easy understanding.

What is section 73 and 74 under CGST act?

Adjudication proceeding Under GST


Adjudication notice under GST can be issued by the proper officer to the registered person under any of the following circumstances

  • When tax has not been paid; or
  • There is a short payment of tax; or
  • Erroneous refund is granted; or
  • Input tax credit is wrongly availed or utilized.

Provisions for section 73 and 74 under CGST act

Governing provision

Particulars

Section 73

When a proper officer wants to issue notice for non-payment/ short payment of tax or erroneous refund or wrong availment or utilization of input tax credit by any reason other than fraud/ wilful mis-statement/ suppression of facts.

Section 74

When a proper officer wants to issue notice for non-payment/ short payment of tax or erroneous refund or wrong availment or utilization of input tax credit by reason of fraud/ wilful mis-statement/ suppression of facts.

What is procedure for notice issue under section 73 and 74 of CGST act 2017

Following is the specified procedure which needs to be followed before the issuance of notice either under section 73 and 74 of CGST act.

  • The proper officer should communicate the details of tax, interest and penalty under GST as ascertained via Part A of Form GST DRC-01A;
  • If the ascertained tax liability is accepted by the registered person and paid, the same needs to be informed to the proper officer via Form GST DRC-03.
  • If the ascertained tax liability is partially accepted and the registered person is willing to file any submission against the proposed liability. Then, such submission can be made via Part B of Form GST DRC-01A.

It is important to note here that if the ascertained tax liability is acceptable, it is advisable to make payment of the same either before issuance of an adjudication notice or within a specified period. Such timely payment results into either NIL penalty or reduction of penalty, as explained in the table below

The time limit within which ascertained tax liability is paid

Benefits: notice under section 73

Benefits: notice under section 74

Payment of tax and interest before issuance of an adjudication notice

Entire penalty is not payable (i.e. NIL penalty)

A penalty equal to 15% of the tax amount is payable

Payment of tax and interest within 30 days of issuance of an adjudication notice

Entire penalty is not payable (i.e. NIL penalty)

A penalty equal to 25% of the tax amount is payable

Payment of tax and interest after the issuance of an adjudication order

A penalty equal to higher of the following amount is payable – 10% of tax or Rs. 10,000

A penalty equal to 50% of the tax amount is payable

What are the rights of the taxable person during adjudication?

Following are the basic rights of the taxable person during the adjudication procedure

Right to produce all the relevant evidences

In order to support their claim, it is a basic right available to the taxable person to produce/ submit all the relevant evidence while filing their defence reply.

Right to be heard

It is mandatory to provide the opportunity of being heard to the taxable person before issuing an adjudication order. In case, the opportunity is not provided the same results in the violation of the principle of natural justice.

Right to receive a speaking order

As and when the order is passed by the adjudicating authority, the same should be a speaking order.

Right to appeal

In case the taxable person is aggrieved by the order passed by the adjudicating authority, then, an appeal can be preferred against the relevant authority.

What is the adjudication proceedings under GST?

The adjudication proceedings under GST are simplified hereunder

  • The proper officer issues notice either under section 73  or section 74 under CGST act;
  • On receipt of the notice, the registered person should furnish an appropriate defence reply within the specified period;
  • Post submission of the reply, an opportunity of being heard should be issued to the registered person by the proper officer;
  • Considering both the submission and representation done during the personal hearing, a speaking order should be passed by the adjudicating authority.
  • If the registered person is aggrieved by the order passed by the adjudicating authority, then, an appeal can be filed as per the appeal mechanism.

What are the appeal mechanism available to the taxable person under the adjudication proceeding?

Following is the appeal mechanism available to the taxable person under adjudication proceedings under GST

Particulars

Appellate authority

Period within which appeal is to be filed

The first level of appeal

Commissioner (Appeals)

Within a period of three months from the date of receipt of an order

The second level of appeal

Appellate Tribunal

Within a period of three months from the date of receipt of an order

The third level of appeal

High Court and Supreme Court

Within such a specified period

What are the practical tips on handling of an adjudication notice under GST?

Following are the practical tips on handling of an adjudication notice under GST –

  • Firstly, as and when, adjudication notice is issued don’t panic;
  • Go through the entire adjudication notice thoroughly;
  • Jot down the primary points based on which the adjudication notice is issued;
  • Short list the points based on which the defence reply is to be filed;
  • Gather all the required documents and carry out the figurative work;
  • Once all the points, documents and figures are ready, start drafting the defence reply;
  • Search out the relevant judicial ruling which can support your defence reply;
  • Finalize the defence reply and submit the same.

CA Poonam Gandhi

About the author

Poonam Gandhi is a Chartered Accountant and a Lawyer. She is a Professional Freelance Content Writer/ Editor and an Educator.

She masters in creating result-oriented as well as Search Engine Oriented Content. Currently, she is associated with some of the topmost leading sites of India.

She holds more than 3 years of experience in the content field. Before entering the content writing field, she possessed a wide practice experience of more than 9 years, specifically, in the field of Indirect Taxation.

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