GST demand and recovery: sections 73, 74 and 74A
2 min read
Updated 03 Oct 2026
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AI summary
Which section applies to which year, time limits for notices and orders, and how penalties drop if you pay early.
9 sections 4 steps
General legal information, not legal advice. Timelines are indicative and depend on your facts. Consult an advocate or CA before acting on a notice, dispute or recovery.
Key facts
- Sections 73 and 74 cover tax for FY 2017-18 to FY 2023-24. Section 73 is for normal (non-fraud) cases; section 74 is for fraud, wilful misstatement or suppression.
- Section 74A covers FY 2024-25 onwards for both kinds of cases, with one time limit.
- No show cause notice (SCN) is issued if the tax involved is below ₹1,000 (section 74A).
Time limits
| Section | Years covered | Order must be passed within | SCN at least |
|---|---|---|---|
| 73 (non-fraud) | 2017-18 to 2023-24 | 3 years from the due date of that year's annual return | 3 months before the order deadline |
| 74 (fraud) | 2017-18 to 2023-24 | 5 years from the due date of the annual return | 6 months before |
| 74A (both) | 2024-25 onwards | SCN within 42 months of the annual return due date; order within 12 months of the SCN (extendable by 6 months) | — |
Penalty under section 74A
| When you pay tax + interest | Non-fraud | Fraud |
|---|---|---|
| Before the SCN | No penalty | 15% of tax |
| Within 60 days of the SCN | No penalty | 25% of tax |
| Within 60 days of the order | 10% of tax or ₹10,000, whichever is higher | 50% of tax |
| Later | 10% or ₹10,000 | 100% of tax |
The process
- DRC-01A: pre-SCN intimation of the amount the officer thinks is due. You can pay with DRC-03 or reply.
- DRC-01: the show cause notice. Reply in DRC-06, usually within 30 days, and ask for a personal hearing.
- DRC-07: the order with tax, interest and penalty.
- Recovery (section 79) starts if you do not pay within 3 months of the order or file an appeal with the pre-deposit.
Common questions
Should I pay the tax under protest?
If you agree the tax is due, paying early with DRC-03 cuts the penalty sharply. If you disagree, reply with documents. Payment "under protest" does not stop the officer from passing an order.
Can the department use section 74 just to get more time?
Only if there is real evidence of fraud, wilful misstatement or suppression. Courts have set aside section 74 notices that do not show such intent.
Is interest payable even if there is no penalty?
Yes. Interest under section 50 is always payable on tax paid late.
Sources
Law as of October 2026. Verify against the latest notifications before relying on it for filings.
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