Tax Professionals Raise Alarm Over Misuse of GST Section 74(A) Notices

Tax professionals and trade bodies have raised serious concerns over the alleged misuse of Section 74(1) of the GST Act by tax authorities. This section deals with the issuance of show-cause notices in cases of tax not paid or short-paid due to fraud, willful misstatement, or suppression of facts. Professionals are reporting that these notices are being issued routinely, even in cases of genuine errors or interpretational differences, without any concrete evidence of fraudulent intent. This practice is leading to undue hardship for businesses, forcing them into prolonged litigation and creating an environment of fear. The associations have urged the Central Board of Indirect Taxes and Customs (CBIC) to issue clear guidelines to field formations to ensure that Section 74 is invoked judiciously and only when there is clear evidence of deliberate tax evasion, not for minor or unintentional compliance lapses.