Dropping of Proceedings Under Section 74 Does not Automatically Abate Proceedings Under Section 122 of CGST Act : Allahabad High Court—CS. Shruti Taparia

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The Tax Publishers GST--Section 74 v. Section 122 Dropping of Proceedings Under Section 74 Does not Automatically Abate Proceedings Under Section 122 of CGST Act : Allahabad High Court CS. Shruti Taparia The learned author seeks to examine an issue as to whether dropping of proceedings under section 74 of the Central Goods and Services Tax Act, 2017 (in short 'CGST Act') will ipso facto abate the proceedings under section 122 of the CGST Act. The issue under consideration is being discussed in the light of relevant statutory provisions and an Allahabad High Court judgment in the case of Patanjali Ayurved Ltd. v. UOI & Ors., decided on 29-05-2025. 1. Statutory Framework: Section 74 and Section 122 of CGST Act To understand the core issue, it is imperative to analyse the distinct nature of section 74 and section 122 of the CGST Act. (i) Provisions of Section 74 Section 74 deals with provisions relating to determination of tax not paid or short-paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts. As per sub-section (1) of section 74 of the CGST Act, where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. Thus, section 74 is the primary provision for recovering tax dues along with interest and penalty in cases where the non-payment or wrongful availment of ITC is due to fraud, wilful mis-statement or suppression of facts. The proceedings under section 74 are centred on establishing the tax liability. (ii) Provisions of Section 122 SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Section 74 v. Section 122

Dropping of Proceedings Under Section 74 Does not Automatically Abate Proceedings Under Section 122 of CGST Act : Allahabad High Court

CS. Shruti Taparia

The learned author seeks to examine an issue as to whether dropping of proceedings under section 74 of the Central Goods and Services Tax Act, 2017 (in short 'CGST Act') will ipso facto abate the proceedings under section 122 of the CGST Act. The issue under consideration is being discussed in the light of relevant statutory provisions and an Allahabad High Court judgment in the case of Patanjali Ayurved Ltd. v. UOI & Ors., decided on 29-05-2025.

1. Statutory Framework: Section 74 and Section 122 of CGST Act

To understand the core issue, it is imperative to analyse the distinct nature of section 74 and section 122 of the CGST Act.

(i) Provisions of Section 74

Section 74 deals with provisions relating to determination of tax not paid or short-paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts.

As per sub-section (1) of section 74 of the CGST Act, where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice.

Thus, section 74 is the primary provision for recovering tax dues along with interest and penalty in cases where the non-payment or wrongful availment of ITC is due to fraud, wilful mis-statement or suppression of facts. The proceedings under section 74 are centred on establishing the tax liability.

(ii) Provisions of Section 122