Demystifying Adjudication Notices under GST and the Role of LegalCover Subscription

Understanding Sections 73 and 74 of the CGST Act

Adjudication notices under GST, issued under Sections 73 and 74 of the CGST Act, play a crucial role in resolving disputes related to tax payments, refunds, and input tax credits. In this article, we simplify the adjudication process through a Frequently Asked Questions format and explore how LegalCover Subscription can assist you.

Q1: What are Sections 73 and 74 under the CGST Act?

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.
There is a short payment of tax.
Erroneous refunds are granted.
Input tax credit is wrongly availed or utilized.

Q2: What is the procedure for issuing notices under Sections 73 and 74 of the CGST Act?

The procedure for issuing notices under Sections 73 and 74 includes the following steps:

The proper officer communicates the tax, interest, and penalty details as ascertained through Part A of Form GST DRC-01A.
If the tax liability is accepted by the registered person and paid, the same is informed to the proper officer via Form GST DRC-03.
If the tax liability is partially accepted, and the registered person wishes to contest the proposed liability, they can submit their defense through Part B of Form GST DRC-01A.
Timely payment of the ascertained tax liability can result in either no penalty or a reduced penalty, as outlined below.

Q3: What are the benefits of timely payment of ascertained tax liability under Sections 73 and 74?

Benefits for Section 73:

Payment of tax and interest before issuance of an adjudication notice results in no penalty (NIL penalty).
Payment of tax and interest within 30 days of receiving an adjudication notice results in no penalty (NIL penalty).
Payment of tax and interest after the issuance of an adjudication order results in a penalty equal to the higher of 10% of tax or Rs. 10,000.

Benefits for Section 74:

Payment of tax and interest before issuance of an adjudication notice results in a penalty equal to 15% of the tax amount.
Payment of tax and interest within 30 days of receiving an adjudication notice results in a penalty equal to 25% of the tax amount.

Q4: What rights does the taxable person have during the adjudication process?

The taxable person has specific rights during the adjudication process, including:

The right to produce relevant evidence to support their claim.
The right to be heard before the issuance of an adjudication order.
The right to receive a speaking order when the order is passed.
The right to appeal the adjudication order if they are aggrieved.

Q5: What is the adjudication process under GST?

The adjudication process under GST involves these key steps:

The proper officer issues a notice under either Section 73 or Section 74 of the CGST Act.
The registered person submits a defense reply within the specified period.
The registered person is given an opportunity for a personal hearing.
The adjudicating authority passes a speaking order, considering both submissions and representations.
If the registered person is dissatisfied with the order, they can appeal to the relevant authority.

Q6: What are the appeal mechanisms available to the taxable person in adjudication proceedings under GST?

The appeal mechanisms for taxable persons under adjudication proceedings include:

The first level of appeal: Commissioner (Appeals) within three months of receiving an order.
The second level of appeal: Appellate Tribunal within three months of receiving an order.
The third level of appeal: High Court and Supreme Court within a specified period.

Q7: What are practical tips for handling an adjudication notice under GST?

Practical tips for managing an adjudication notice under GST include:

Stay composed and avoid panic when an adjudication notice is issued.
Thoroughly review the notice and identify the key issues.
Prepare a structured defense reply based on the notice's points.
Gather all necessary documents and information.
Draft a defense reply, citing relevant judicial rulings.
Submit the finalized defense reply.

Role of LegalCover Subscription

LegalCover Subscription offers invaluable support throughout the adjudication process. It provides access to legal experts who can help draft and send responses to adjudication notices, ensuring compliance with legal requirements. By subscribing to LegalCover, you can navigate the complexities of GST adjudication with confidence.