Central Goods and Services Tax Act, 2017 • Chapter XV - Demands and Recovery • Updated 15 September 2026
Section 76 of CGST Act - Tax Collected but Not Paid to Government
Section 76 of the Central Goods and Services Tax Act, 2017 deals with an amount collected from another person as representing GST but not paid to the Government. The provision applies even where the underlying supply is not taxable.
Meaning and scope of Section 76
The expression "collected ... as representing the tax" is central to Section 76. The provision is aimed at amounts actually collected from another person under the representation that the amount is GST. Once such an amount is collected, sub-section (1) requires payment to the Government irrespective of whether the related supply was taxable.
The opening non-obstante clause gives Section 76 overriding operation over contrary orders or directions of an Appellate Authority, Appellate Tribunal or court, other provisions of the Act or Rules, and other law for the time being in force, to the extent stated in the section.
Section 76 - statutory provision
(1) Notwithstanding anything to the contrary contained in any order or direction of any Appellate Authority or Appellate Tribunal or court or in any other provisions of this Act or the rules made thereunder or any other law for the time being in force, every person who has collected from any other person any amount as representing the tax under this Act, and has not paid the said amount to the Government, shall forthwith pay the said amount to the Government, irrespective of whether the supplies in respect of which such amount was collected are taxable or not.
(2) Where any amount is required to be paid to the Government under sub-section (1), and which has not been so paid, the proper officer may serve on the person liable to pay such amount a notice requiring him to show cause as to why the said amount as specified in the notice, should not be paid by him to the Government and why a penalty equivalent to the amount specified in the notice should not be imposed on him under the provisions of this Act.
(3) The proper officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub-section (2), determine the amount due from such person and thereupon such person shall pay the amount so determined.
(4) The person referred to in sub-section (1) shall in addition to paying the amount referred to in sub-section (1) or sub-section (3) also be liable to pay interest thereon at the rate specified under section 50 from the date such amount was collected by him to the date such amount is paid by him to the Government.
(5) An opportunity of hearing shall be granted where a request is received in writing from the person to whom the notice was issued to show cause.
(6) The proper officer shall issue an order within one year from the date of issue of the notice.
(7) Where the issuance of order is stayed by an order of the court or Appellate Tribunal, the period of such stay shall be excluded in computing the period of one year.
(8) The proper officer, in his order, shall set out the relevant facts and the basis of his decision.
(9) The amount paid to the Government under sub-section (1) or sub-section (3) shall be adjusted against the tax payable, if any, by the person in relation to the supplies referred to in sub-section (1).
(10) Where any surplus is left after the adjustment under sub-section (9), the amount of such surplus shall either be credited to the Fund or refunded to the person who has borne the incidence of such amount.
(11) The person who has borne the incidence of the amount, may apply for the refund of the same in accordance with the provisions of section 54.
How proceedings under Section 76 work
| Stage | Legal effect |
|---|---|
| Collection | An amount is collected from another person as representing tax under the CGST Act. |
| Immediate payment obligation | The collected amount must be paid to the Government forthwith, even if the related supply is not taxable. |
| Show-cause notice | If the amount is not paid, the proper officer may issue notice for the amount and propose a penalty equivalent to the amount specified in the notice. |
| Representation and hearing | The representation, if any, must be considered. A hearing must be granted where requested in writing. |
| Order | The proper officer determines the amount due and must state the relevant facts and basis of the decision. |
| Time for order | The order must be issued within one year from the date of notice, excluding a qualifying period during which issuance of the order is stayed. |
| Interest | Interest under Section 50 runs from the date the amount was collected until payment to Government. |
| Adjustment/refund | Payment is adjusted against tax payable for the supplies concerned. Surplus is dealt with under sub-sections (10) and (11), including refund under Section 54 to the person who bore the incidence, where applicable. |
Penalty under Section 76(2)
The show-cause notice may require the person to explain both why the collected amount should not be paid to Government and why a penalty equivalent to the amount specified in the notice should not be imposed. The proposed penalty therefore needs to be part of the notice and is subject to adjudication after consideration of the person's representation.
Interest under Section 76(4)
Interest is additional to the amount payable under Section 76. It is linked to the rate specified under Section 50 of the CGST Act and runs from the date the amount was collected until the date it is paid to the Government. The applicable notified rate and any legally relevant period-specific changes should be checked for the period concerned.
Notice, hearing and one-year adjudication period
Section 76 does not itself prescribe a separate limitation period for issuance of the show-cause notice. Once a notice under sub-section (2) is issued, however, sub-section (6) requires the order to be issued within one year from the date of the notice. Under sub-section (7), a period during which issuance of the order is stayed by a court or Appellate Tribunal is excluded from that computation.
A written request for personal hearing attracts the express safeguard in sub-section (5). In addition, the final order must disclose the relevant facts and the basis of the decision under sub-section (8).
Relevant CGST Rules and forms
Rule 142 of the CGST Rules provides the procedural framework for demand notices and orders. For proceedings under Section 76, the notice summary is uploaded electronically in FORM GST DRC-01, a representation is made in FORM GST DRC-06, and the summary of the order is uploaded in FORM GST DRC-07. The DRC-07 summary is treated as the notice for recovery under Rule 142.
Adjustment and refund of surplus
An amount paid under Section 76 is first adjusted against tax payable, if any, in relation to the supplies concerned. If a surplus remains after adjustment, Section 76(10) provides for credit to the Fund or refund to the person who bore the incidence of that amount. Under Section 76(11), that person may apply for refund in accordance with Section 54.
Practical points
- Section 76 is concerned with an amount collected as representing GST, not merely with an unpaid tax liability.
- The obligation under sub-section (1) applies even if the underlying supplies are non-taxable.
- Check invoices, receipts, contracts, books of account and payment records to establish whether an amount was actually collected as tax.
- Where a notice is issued, verify the amount proposed, the proposed equivalent penalty, the interest period, and the factual basis relied upon.
- If a personal hearing is required, make the request in writing.
- Check whether the final order has been issued within the one-year period after accounting for any legally excludable stay period.