Determination of tax & adjudication of demand by Proper Officer – Section 74 of CGST Act, 2017

Meaning of proper officer" referred to in Section 74 of the CGST Act, 2017

As per Section 2(91) of the CGST Act, 2017, "proper officer" means an officer appointed under the Act who is authorized to perform various functions under the Act, such as registration of taxpayers, assessment of tax liability, and enforcement of the Act. The proper officer has the power to determine the tax liability of a person and take appropriate actions in case of non-payment or evasion of tax. The term "proper officer" is used in several sections of the CGST Act, 2017, including Section 74, which deals with the determination of tax and adjudication of demand. Under Section 74, the proper officer may issue a notice to any person who he has reason to believe has evaded tax or not paid tax that is due, and determine the tax and interest payable, and issue a demand notice for the same.

Section 74 of the Central Goods and Services Tax (CGST) Act, 2017 deals with the determination of tax and adjudication of demand by the proper officer. The section provides the following provisions:

1. If the proper officer has reason to believe that any person has evaded tax or has not paid tax that is due, he may serve a notice on such person, informing him of the grounds on which the tax is being demanded.

2. The notice must be served within five years from the date when the tax was due.

3. The person must be given an opportunity to be heard, and the proper officer may ask him to produce any accounts, documents, or other evidence that he deems necessary.

4. If the person is found to have evaded tax or not paid tax that is due, the proper officer may determine the tax and the interest that is payable, and issue a demand notice for the same.

5. The person must pay the amount that is demanded within thirty days from the date when the demand notice is served on him.

6. If the person fails to pay the demanded amount, the proper officer may initiate recovery proceedings against him.

7. If the person disputes the demand, he may file an appeal with the appropriate authority within three months from the date of the receipt of the demand notice.

The provisions of Section 74 are aimed at ensuring compliance with the tax laws and preventing tax evasion. The proper officer is given wide powers to determine the tax that is payable and to issue demand notices for the same. However, the person against whom the demand is made is also given an opportunity to be heard and to produce evidence in support of his case.

The time limit for serving the notice under Section 74

As per Section 74 of the Central Goods and Services Tax (CGST) Act, 2017, the time limit for serving the notice is within five years from the due date for filing of annual return for the relevant tax period. In other words, the notice must be served within five years from the date when the annual return was due to be filed for the relevant tax period. For instance, if the annual return for a particular tax period was due on 31st December 2020, the proper officer must serve the notice within five years from that date, i.e. by 31st December 2025.

FAQs

Who is the "proper officer" referred to in Section 74 of the CGST Act, 2017?

The "proper officer" is an officer appointed under the CGST Act, 2017 who is authorized to perform various functions under the Act, such as registration of taxpayers, assessment of tax liability, and enforcement of the Act.

What is the notice that the proper officer can serve under Section 74?

The proper officer can serve a notice under Section 74 if he has reason to believe that any person has evaded tax or has not paid tax that is due. The notice informs the person of the grounds on which the tax is being demanded.

What is the time limit for serving the notice under Section 74?

The notice must be served within five years from the date when the tax was due.

What happens if a person is found to have evaded tax or not paid tax that is due?

If the person is found to have evaded tax or not paid tax that is due, the proper officer may determine the tax and the interest that is payable, and issue a demand notice for the same.

What is the time limit for paying the demanded amount?

The person must pay the demanded amount within thirty days from the date when the demand notice is served on him.

Can a person dispute the demand made under Section 74?

Yes, if the person disputes the demand, he may file an appeal with the appropriate authority within three months from the date of the receipt of the demand notice.

What are the consequences of not paying the demanded amount?

If the person fails to pay the demanded amount, the proper officer may initiate recovery proceedings against him, which may include seizing and selling his assets to recover the amount due.