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Section 74 of CGST Act, 2017 – Determination of Tax Not Paid or Short Paid (Fraud, Wilful Misstatement or Suppression) Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 74 Section 74 provides the mechanism for determination and recovery of tax where non-payment or short-payment of tax, wrong refund or wrongful availment of ITC has occurred by reason of fraud, wilful misstatement or suppression of facts with intent to evade tax. This section applies only in cases involving mens rea (intent) . 2. When Section 74 Applies Section 74 is invoked in cases such as: Issuance of fake or bogus invoices Claim of ITC without actual supply Suppression of taxable turnover Collection of tax without payment to Government Deliberate misclassification or undervaluation Genuine mistakes or interpretational issues are excluded. 3. Statutory Provision – Section 74 (Overview) Where it appears to ...

  Introduction Under the GST law, demand proceedings must strictly follow the principles of natural justice . However, many taxpayers are facing situations where GST DRC-07 is issued directly without serving a proper Show Cause Notice (SCN) . Such actions are illegal and unsustainable in law. This article explains: Whether GST DRC-07 can be issued without SCN Relevant legal provisions under GST Important High Court case laws Remedies available to taxpayers Practical appeal grounds & formats What is GST DRC-07? GST DRC-07 is a summary of demand issued under Rule 142(5) of CGST Rules, 2017 . It is issued only after passing a valid adjudication order under: Section 73 (non-fraud cases), or Section 74 (fraud / suppression cases) 📌 DRC-07 is not a substitute for SCN. It is only a consequence of a valid adjudication order. Is Show Cause Notice Mandatory Before DRC-07? Yes. Issuance of SCN is mandatory . Statutory Provisions Section 73(1...