CA writes Letter to CBIC to take Immediate Intervention on Alleged Misuse of CGST Section 74 by Delhi GST offices [Read Order]

A Chartered Accountant (CA) and author of taxation books has penned a letter to the Central Board of Indirect Taxes and Customs (CBIC) expressing grave apprehensions regarding misuse of Section 74 of the Central Goods and Services Tax (CGST) Act, 2017, by Delhi GST offices.

Complete Ready to Use PDFs of 200+ Agreements Click here

The letter of CA Rakesh Garg states that several Delhi-based GST offices are reportedly initiating proceedings under Section 74 which deals with cases of tax evasion or wrongful input tax credit (ITC) involving fraud or willful misstatement even when the preconditions under the law are not fulfilled.

Also read: Certificate with UDIN for ₹1000, Tax Audits for ₹2500: A Serious Threat to CA Profession

The CA observes that penalty proceedings and show cause notices are being served without scrutinizing facts properly, causing unnecessary harassment of businesses and taxpayers. Such acts, the letter states, not only go against the canons of natural justice but also instill an atmosphere of fear among honest taxpayers, negating the government's efforts to encourage voluntary compliance.

Specifically, the letter stresses that Section 74 should only be invoked in cases where there is clear evidence of fraud, willful misstatement, or suppression of facts not in routine mismatches or clerical errors that can be addressed under other provisions of the Act.

The accountant has urged the CBIC to issue clear instructions to GST field officers to prevent the indiscriminate use of Section 74 and ensure that proceedings are initiated only in appropriate cases backed by proper legal grounds.

Also read: GSTN Rolls Out Biometric-Based Aadhaar Authentication for Sikkim GST Registrations

The letter also suggests that the CBIC carry out a review of the current Section 74 cases in Delhi to find cases of overreach or procedural failures. It asks for capacity building and training of GST officers to improve their ability to differentiate between bona fide errors and intentional fraud, thus protecting the rights of honest taxpayers.

GST READY RECKONER: Complete Topic wise Circulars, Instructions & Guidelines Click here

With companies already facing several compliance issues, the CA's appeal to the CBIC presents the need for a balanced and legally acceptable approach in tax administration. It is yet to be seen how the CBIC would react to this call for action and if corrective actions would be initiated to redress these complaints.

Also read: GST DRC-06 Forms Show Adequate Opportunity Given to Taxpayer: Delhi HC Upholds ₹35 Lakh GST Demand

To Read the full text of the Letter CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates