Demand & Recovery under GST – Relevant Forms – Section 73 & 74

In this article, we will discuss the concept of Demand and Recovery under GST and the relevant forms and provisions under Section 73 and 74 of the GST Act. The Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services in India. GST has replaced multiple indirect taxes levied by the central and state governments, making it a comprehensive tax system. Demand and Recovery under GST refer to the process of collecting pending tax dues from businesses and individuals who have not paid their GST liabilities on time. Let us understand the concept of Demand and Recovery under GST in detail.

What is Demand and Recovery under GST?

Demand and Recovery under GST refer to the process of collecting pending tax dues from businesses and individuals who have not paid their GST liabilities on time. When a business or an individual fails to pay the GST amount within the prescribed time limit, the GST department issues a demand notice. The demand notice contains the details of the pending tax dues, the interest and penalties applicable, and the due date by which the payment needs to be made. In case the payment is not made within the prescribed time limit, the GST department initiates the recovery process.

The recovery process involves the seizure of assets of the defaulter, including bank accounts, properties, and other assets. The GST department can also initiate legal proceedings against the defaulter to recover the outstanding tax dues.

Relevant Forms for Demand and Recovery under GST

To initiate the process of demand and recovery under GST, the GST department uses the following forms:

GST DRC-01 – Demand Notice
GST DRC-02 – Recovery Certificate
GST DRC-03 – Show Cause Notice
GST DRC-04 – Reply to Show Cause Notice
GST DRC-05 – Order for release of seized property
GST DRC-06 – Order for Provisional Release of Seized Property
GST DRC-07 – Application for Deferred Payment/ Payment in Instalments
GST DRC-08 – Certificate of Payment/ Adjustment of Tax, Interest, Penalty, or Fee
GST DRC-09 – Application for Rectification of Mistake
GST DRC-10 – Notice for Auction of Seized Goods

Section 73 and 74 of the GST Act

Section 73 and 74 of the GST Act deal with the provisions related to demand and recovery under GST. Let us understand these provisions in detail.

Section 73 – Determination of Tax not Paid or Short Paid or Erroneously Refunded or Input Tax Credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts

Section 73 deals with the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts. In simple words, this section deals with the cases where the tax dues are pending due to non-payment, short payment, or wrong availing of input tax credit.

Under this section, the proper officer of the GST department can issue a notice to the defaulter, asking him to pay the outstanding tax dues along with interest and penalty. The defaulter can make the payment within 30 days of the notice, failing which the GST department can initiate recovery proceedings.

If the defaulter disputes the demand, he can file a reply to the show cause notice issued by the GST department. The proper officer can then issue an order, either confirming the demand or modifying it based on the reply filed by the defaulter.

Section 74 – Determination of Tax Not Paid or Short Paid or Erroneously Refunded or Input Tax Credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts

Section 74 deals with the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts. However, this section deals with cases where the tax dues are pending due to fraud or any willful misstatement or suppression of facts.

Conclusion

Demand and Recovery under GST are critical processes to ensure timely payment of tax dues by businesses and individuals. Failure to pay the GST amount within the prescribed time limit can lead to demand and recovery proceedings, which can adversely affect the business operations and reputation. As a responsible business owner or an individual, it is essential to ensure timely payment of your GST liabilities to avoid any legal complications.