An apt representation on the arbitrary and mechanical invocation of Section 74 of the CGST Act by GST Audit Commissionerates and DGGI
Advocate Shree Rakesh Gargji, a senior practitioner from Delhi and a respected author on indirect tax laws, has recently submitted a detailed representation to the Chairman, CBIC highlighting the arbitrary and mechanical invocation of Section 74 of the CGST Act by GST Audit Commissionerates and DGGI, particularly in Delhi.
As per RTI responses annexed with the letter, almost 100% of the SCNs issued over the past three financial years were under Section 74 – even in matters involving no element of fraud or suppression.
Section 74 is meant for cases involving wilful misstatement or fraud. However, it is increasingly being misused even in interpretational matters, rate disputes, RCM lapses, or refund adjustments – leading to unjust higher penalties and reputational harm for bonafide taxpayers. GST audit officers continue to issue notices under Section 74 in routine matters where Section 73 should rightfully apply.
The letter rightly urges CBIC to scrutinise such practices through an oversight mechanism, and Direct field officers to invoke Section 74 only where fraud or suppression is clearly established through evidence.
It is high time that the Government bring uniformity, fairness, and legal discipline in the audit and adjudication process under GST. Such representations are a step forward in upholding the rule of law and protecting honest taxpayers from undue harassment.
The copy of the order is as under:
