Legal Timeline
Under Section 74 of the CGST Act:
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sec-74(2)-SCN must be issued at least 6 months before the time limit for passing the order.
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sec-74(10)-Order must be issued within 5 years from the due date of furnishing the annual return.
For FY 2019-20 (with CBIC extensions):
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Due date for Annual Return: 31 March 2021
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Last date for adjudication order: 31 March 2026
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Last date to issue SCN: 30 September 2025
ЁЯСЙ This means FY 2019-20 is currently under high scrutiny.
High-Risk Fraud Areas
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Works Contractors & Real Estate – non-reversal of ITC on un-booked flats, wrong ITC on commercial vs residential, non-compliance with 1%/5% scheme, suppression of landowner’s share in JDA projects.
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ITC Issues – availing blocked credits, mismatch with GSTR-2A(especially after introduction of Sec 36(4) restriction), disallowed transitional credit, ITC without valid invoice or supply.
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Refund Misuse – excess refunds on exports, refunds on ineligible ITC.
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Suppression of Turnover – mismatch between financials, 26AS, GSTR-1 & 3B, non-disclosure of allied revenues.
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Circular Billing & Bogus Vendors – fake invoices and circular trading in construction materials(iron& steel,cement etc).
Preventive Actions
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Reconcile GSTR-1, GSTR-3B, GSTR-9/9C with books of accounts.
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Reverse ineligible ITC(sec-16 and 17) through DRC-03.
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Ensure ITC reversal for un-booked flats and commercial portion as per Rule 42/43.
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Maintain invoices, agreements, e-way bills, possession letters, RERA filings.
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Voluntary tax + interest payment before SCN reduces penalty.
Key Takeaways
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If fraud/suppression is established → Section 74 applies (tax + interest + 100% penalty).
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Even genuine errors now fall under Section 74 (not Section 73).
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SCNs for FY 2019-20 must be issued by 30 September 2025.
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Taxpayers with turnover above тВ╣2 crore should proactively review compliance.
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A professional review before the deadline can help avoid litigation especially those who have not faced any audit or assessment/scrutiny for FY 2019-20 yet.
