Kerala GST Issues Clarification and Instructions on Issuing Separate Notices u/s 73 & 74 of KSGST Act [Read Circular]

The Kerala State Goods and Services Tax ( SGST ) Department has issued Circular No. 3/2025 dated 20-01-2025, providing clarifications and instructions on the issuance of separate notices under Sections 73 and 74 of the Kerala SGST Act, 2017.

In the past, instructions were issued through Circular No. 06/2023 (dated 08-01-2023) and Circular No. 16/2023 (dated 09-10-2023) to guide officers in issuing tax notices. The law requires that tax issues be handled separately based on the type of tax default.

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Clarifications from Circular No. 16/2023

• GST law follows a subject-based system, meaning taxpayers’ different tax issues must be treated separately.
• If a taxpayer has multiple tax issues that fall under both Sections 73 and 74, they must receive separate notices:
  • Section 73 covers taxes that were not paid or underpaid due to mistakes or ignorance (without fraud).
  • Section 74 covers tax not paid due to fraud or intentional misrepresentation.
• Notices under each section must be issued separately to avoid confusion in legal proceedings.

Why New Circular Was Issued

Despite earlier instructions, some tax officials combined notices for Sections 73 and 74, making it difficult to conduct legal proceedings properly. The Kerala SGST department has now provided clear rules for issuing separate notices under each section to fix this issue.

New Instructions for Issuing Notices and Orders

a. Proper Process for Issuing Notices: Each case requires a detailed show-cause notice to be prepared manually. The notice’s summary (GST DRC-01 form) must then be uploaded online through the GST portal.

b. Handling Multiple Notices in the GST System: Currently, the GST system allows only one notice per case ID. Until a technical solution is available, officers must create a new case ID for each additional notice.

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c. Support from Back-Office Teams: The district and state tax offices will help officers follow these new rules.

d. Avoiding Artificial Splitting of Notices: All tax issues under Section 73 should be included in a single notice under that section. All tax issues under Section 74 should be included in a single notice under that section. Notices should not be broken up year-wise just to create multiple cases.

Implementation and Compliance

Any difficulties in following these new rules should be reported to the Commissioner.

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