Section 76 - Tax collected but not paid to Government
Chapter XV - Demands and Recovery
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Finin2min Summary - Section in 2 Minutes
Requires any amount collected as representing tax to be paid to Government even if the underlying supply was not taxable. Notice and hearing apply. Paid amount is adjusted; recipient may claim refund subject to law. Unjust-enrichment and incidence evidence remain relevant.
Exact operative text
76. Tax collected but not paid to Government.-(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.
Paragraph-wise decode
Requires any amount collected as representing tax to be paid to Government even if the underlying supply was not taxable. Notice and hearing apply. Paid amount is adjusted; recipient may claim refund subject to law. Unjust-enrichment and incidence evidence remain relevant.
Section-Rule-Form-Notification bridge
No direct Rule certified in Phase 1. Check notifications, circulars, forms and corresponding State law.
The mapping is a legal concordance, not a round-robin related-link list. It is limited to instruments certified in this phase.
Practical example
A supplier collected GST on an exempt supply and retained it; section 76 requires deposit notwithstanding exemption.
Professional alert
Do not net unauthorised collections against unrelated credits without lawful basis.
Implementation checklist
- Fix the transaction, taxable period and jurisdiction.
- Read every subsection, proviso, explanation and omission marker.
- Open the mapped Rule, form, notification and circular.
- Test State/UT variation and portal version.
- Preserve evidence, approvals, working papers and acknowledgements.
- Record the conclusion, assumptions, source date and reviewer.
Evidence and retention checklist
- Contract, purchase order, invoice or underlying transaction document.
- Registration, return, ledger, challan and portal acknowledgement.
- Official Act/Rule/notification version used and effective date.
- Internal tax position paper, computation and management approval.
- Correspondence, notices, replies, orders and appeal papers where applicable.
Practical Q&A
- What does section 76 regulate?
- It regulates tax collected but not paid to government. Read the exact text, conditions, exceptions and transaction date together.
- Which subordinate law should be checked?
- No direct CGST Rule has been certified in this phase. Notifications, circulars, forms and the corresponding SGST/UTGST layer may also apply.
- What evidence should be retained?
- Preserve the contract or transaction record, invoice or form, portal acknowledgement, payment/ledger evidence, correspondence, legal working and the official source version used.
- Can portal behaviour override the statute?
- No. Portal functionality is operational evidence; legal entitlement and liability remain controlled by the Act, Rules, notifications and binding decisions.