19

DEMANDS AND
RECOVERY

LEARNING OUTCOMES
After studying this Chapter, you will be able to –
 understand the provisions relating to determination of tax
not paid or short paid or erroneously refunded or input tax
credit wrongly availed or utilised whether for any reason
other than fraud or wilful-misstatement or suppression of
facts, or otherwise.
 explain the consequences in case where tax is collected but
not paid to Government.
 describe the provisions of tax wrongfully collected and paid
to the Government.
 explain the recovery proceedings.
 elaborate the facility of payment of tax and other amount in
instalments.
 identify the cases where the transfer of property is void.
 explain provisions relating to provisional attachment to
protect revenue.

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 19.2 GOODS AND SERVICES TAX

1. INTRODUCTION
 Though it is the duty of every taxable person to assess and pay his GST
liabilities voluntarily, tax administration occasionally comes across situations
where the tax dues are not paid correctly by the tax payers. While in most of
these cases, such non-payment is due to the bonafide belief of the person
that his activities do not attract any tax liability under the GST law; or he is
entitled to certain exemption, etc., in some cases, such non-payment is
deliberate with an intention to evade payment of such tax.
 To minimize the inadvertent short payment of taxes, the concept of
‘matching’ the details of ‘outward supplies’ of supplier with the details of
‘inward supplies’ of recipient has been introduced in the GST Act.
 Moreover, the self-assessed tax has to be paid by the due date prescribed
under the GST law and in case of any failure to pay the same by the due date,
the Input Tax Credit (ITC) will not be available to customers and also the tax
payer will not be able to file any return for further period. Effectually, these
provisions work as a self-policing system and take care of any mis-match in
the payment of taxes.
 However, despite these provisions, there may arise some instances where the
tax was not paid correctly. To deal with such situations, Revenue must be
empowered to demand the tax liability and recover such tax from the
defaulter.
 On one hand, there is a dire need to have a robust demand and recovery
mechanism in place in order to empower the Revenue to exercise said
powers, at the same time, care must also be taken that there should not be
arbitrary exercise of such powers by the Revenue and same should be
appropriately regulated.

 Accordingly, the GST law

contains elaborate provisions
for the recovery of tax under
various situations, which can be
broadly classified into following
two categories:

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 DEMANDS AND RECOVERY 19.3

Tax short paid or

erroneously refunded Non-payment of self-
or ITC wrongly availed assessed tax or amount
collected as representing
the tax

 Chapter XV of the CGST Act 2017 [Sections 73 to 84] and Chapter XVIII [Rules
142 to 161] of the CGST Rules, 2017 contains various provisions relating to
demands and recovery.

Provisions of demands and recovery under CGST Act have also been
made applicable to IGST Act vide section 20 of the IGST Act.

Before proceeding to understand the demands and recovery provisions, let

us first go through few relevant definitions.

2. RELEVANT DEFINITIONS

 Adjudicating authority: means any authority, appointed or authorised to

pass any order or decision under this Act, but does not include the Central
Board of Excise and Customs, the Revisional Authority, the Authority for
Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate
Authority and the Appellate Tribunal [Section 2(4) of the CGST Act].

 Appellate Authority: means an authority appointed or authorised to hear

appeals as referred to in section 107 [Section 2(8) of the CGST Act].

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 19.4 GOODS AND SERVICES TAX

 Appellate Tribunal: means the Goods and Services Tax Appellate Tribunal
constituted under section 109 [Section 2(9) of the CGST Act].

 Commissioner: means the Commissioner of central tax and includes the

Principal Commissioner of central tax appointed under section 3 and the
Commissioner of integrated tax appointed under the Integrated Goods and
Services Tax Act [Section 2(24) of the CGST Act].

 Market value: shall mean the full amount which a recipient of a supply is
required to pay in order to obtain the goods or services or both of like kind
and quality at or about the same time and at the same commercial level
where the recipient and the supplier are not related [Section 2(73) of the
CGST Act].

 Proper officer: in relation to any function to be performed under this Act,

means the Commissioner or the officer of the central tax who is assigned that
function by the Commissioner in the Board [Section 2(91) of the CGST Act].

 Business: includes –

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any
other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to (a)
above;
(c) any activity or transaction in the nature of (a) above, whether or not there is
volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital assets and services in connection
with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or
any other consideration) of the facilities or benefits to its members, as the case may
be;

(f) admission, for a consideration, of persons to any premises; and

(g) services supplied by a person as the holder of an office which has been accepted
by him in the course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker
in such club
(i) any activity or transaction undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public authorities

[Section 2(17) of CGST Act].

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 DEMANDS AND RECOVERY 19.5

 Person: includes [Section 2(84) of CGST Act]-

An A HUF An association of
individual persons or a body
of individuals,
A Limited whether
Liability incorporated or
A firm not, in India or
Partnership
outside India

Any corporation
established Any body
corporate Trust
by/under any
Central, State or incorporated by
Provincial Act or or under the A co-operative
Government laws of a society
company as defined country outside registered
in section 2(45) of India under any law
Companies Act,
relating to
2013
Central cooperative
Government/State societies
A local Government
authority Society as defined
under the
Every artificial Societies
A company juridical person, Registration Act,
not falling above 1860

3. DETERMINATION OF TAX NOT PAID/SHORT

PAID/ERRONEOUSLY REFUNDED/ITC
WRONGLY AVAILED/UTILISED [SECTION 73
& SECTION 74]
 Section 73 and section 74 of the CGST Act
deal with the manner in which the tax
liability of a person should be determined
in case of short payment/ non-payment of
tax/ erroneous refund/ wrong availment/
utlisation of ITC.

 The incidence of short payment/non-payment of tax or erroneous refund or

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 19.6 GOODS AND SERVICES TAX

wrong availment/utilisation of ITC may be because of an inadvertent bonafide

mistake (Normal Cases) or it may be a deliberate attempt (Fraud Cases) to
evade the tax. Since the nature of offence is totally different in both the
incidences, hence, under GST law, separate provisions for recovery of the tax
and the amount of penalty have been made to deal with such type of cases.
Besides these, there are provisions to encourage voluntary compliance such
as no penalty or lesser penalty if the tax dues along with interest, are paid
within the specified time limit/ incidence.

 Limitation period:
One of the
fundamental legal
principles is that an
element of certainty
must be brought to
the legal proceedings.
The law of limitation
is based on this
principle. Any action
under any law has to
be taken within the
limitation period
prescribed otherwise
uncertainty would
prevail eternally.

The provisions of limitation period gain all the more importance in the
legislation dealing with indirect taxes, where the tax burden is to be passed
on to the next level at every stage.

Therefore, a tax law must have a limitation period, beyond which demands
cannot be raised. Further, while a lesser time limit is available to the Revenue
to raise the demand in normal cases, it would have a longer limitation period
available to raise the demand in fraud cases.

 Show Cause Notice (SCN): In order to adhere to the principles of natural

justice, before raising any tax demand, a notice has to be issued (generally
referred to as Show Cause Notice), asking the person chargeable with tax to

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 DEMANDS AND RECOVERY 19.7

show cause as to why the specified amount of tax should not be demanded
from him. The issuance of SCN grants an opportunity to such person to
defend himself before adjudication.

The person to whom such notice has been issued can contest the demand by
filing a reply to the show cause notice and also by appearing before the
adjudicating authority personally. After considering the reply filed by the
person as well as the submissions made during the personal hearing, the
adjudicating authority shall pass a speaking order, either confirming the tax
demand or dropping the same.

The provisions contained in section 73 and section 74 have been discussed in

detail below.

I. Non-payment/short payment etc. on account of reasons other than

fraud, wilful misstatement or suppression of facts [Section 73]
A. Issue of SCN [Section 73(1)]
 In a case, where the non-
payment/ short payment/
erroneous refund/ wrong
availment/ utilisation of ITC is
on account of reasons other
than fraud, wilful misstatement
or suppression of facts by the
person chargeable with tax, the
proper officer shall issue a
notice, on the person
chargeable such tax, requiring him to show cause as to why he
should not pay the amount specified in the notice.
 The notice would specify the amount of tax along with interest
payable thereon under section 50 [@ 18% p.a.*] and a penalty
leviable under the provisions of this Act or the rules made
thereunder, liable to be paid by him. Needless to say, the notice
should state the grounds based on which such demand is raised, so
that the person against whom the notice is served is made aware of
the basis of the demand.
* as notified by Notification No. 13/2017 CT dated 28.06.2017

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 19.8 GOODS AND SERVICES TAX

B. Time limit to issue SCN [Section 73(2), (3) & (4) read with section
73(10)]
 The notice should be issued at least 3
months prior to the time limit
specified for passing the order
determining the amount of tax,
interest and any penalty payable by
defaulter.
 The order referred herein has to be
passed within 3 years from the due date for furnishing the Annual
Return for the Financial Year to which the tax not paid/short paid/ITC
wrongly availed/utilised relates to or within 3 years from the date of
erroneous refund.

Thus, the time-limit for issuance of SCN is 2 years and 9 months

from the due date of filing Annual Return for the Financial Year to
which the demand pertains or from the date of erroneous refund.
 Where a notice has been issued for any period on a person
chargeable with tax, if such person commits such default in some
other period also, instead of issuing a detailed notice, a mere
statement containing the details of tax not paid/short
paid/erroneously refunded/ITC wrongly availed/utilised for such
periods, can be issued.
 The Service of such Statement shall be deemed to be Service of SCN
on such person, subject to the condition that the grounds relied
upon for such tax periods [as covered in the Statement] are the same
as are mentioned in the earlier notice.
C. Payment of tax before issuance of SCN [Section 73(5), (6) & (7)]
The law provides an opportunity to the person chargeable with tax to pay
tax and interest before the issuance of notice. It emphatically stipulates that
in such cases, no notice shall be issued and there shall be no other
consequences (including penalty) for the default. The detailed provisions are
as under:
 The person who is chargeable with tax, but has not paid the tax, or
short paid the tax or wrongly availed/utilized the credit, or been
granted an erroneous refund, may voluntarily come forward to pay
such tax alongwith interest before the issue of SCN/Statement, as

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 DEMANDS AND RECOVERY 19.9

the case may be.

 In such case, he has to pay the amount of tax along with interest
payable thereon under section 50 on the basis of his own
ascertainment of such tax or the tax as ascertained by the proper
officer. Further, he needs to inform the proper officer in writing of
such payment.
 Such voluntary payment can be made even if the mistake is pointed
out by the Department, before issue of SCN.
 Where such voluntary payment is made, Department shall not serve
any SCN/Statement. The matter closes at this stage itself and no
penalty is imposed on the person.
 The option of paying tax and interest before issuance of SCN so
as to avoid the issuance of SCN and penalty is available in only those
cases where any tax has not been paid/short paid/erroneously
refunded/ITC wrongly availed/utilized for reasons other than fraud
or any wilful misstatement or suppression of facts to evade tax.
 After the person has voluntarily paid the tax along with interest, if
the proper officer is of the opinion that the amount voluntarily paid
falls short of the amount actually payable, he can issue a SCN in
respect of the amount which falls short of the amount actually
payable.
D. Payment of tax after issuance of SCN [Section 73(8)]
 Where a person is chargeable with tax not paid/short paid etc. and is
issued a notice/statement under this section, misses the opportunity
to pay the tax along with interest before the issue of SCN resulting in
SCN not being issued thereafter and no penalty being imposed, he
has another chance to discharge the tax with interest payable under
section 50 with nil penalty within 30 days of issuance of SCN. All
proceedings in respect of the said SCN shall be deemed to be
concluded.
 In other words, where such person pays the tax demanded along
with interest payable under section 50 within 30 days of issue of
SCN, no penalty shall be payable and all proceedings in respect of
the said notice shall be deemed to be concluded.

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 19.10 GOODS AND SERVICES TAX

E. Adjudication order [Section 73(9) & (11)]

 Where an SCN/Statement is issued
to a person chargeable with tax, he
may furnish a representation to the
proper officer in his defense, if he
is the view that he is not so liable
to pay whole/part of the amount
mentioned in the SCN.
 The proper officer after considering the representation made by the
person, if any, pass an order, determining the amount of tax, interest
and penalty** due from such person.
**Quantum of penalty

Quantum 10% of tax

of penalty
`10,000

 The quantum of penalty will remain same whether the tax amount,
alongwith interest is paid within 30 days of the communication of
the order or after 30 days.
**Notwithstanding anything contained in sub-section (6) or sub-
section (8), penalty under sub-section (9) shall be payable where any
amount of self-assessed tax or any amount collected as tax has not
been paid within a period of 30 days from the due date of payment
of such tax.
From the above, it is clear that the non-payment of self-assessed tax or
the amount collected as representing the tax has been treated differently
than the other short payments as referred in section 73(1) [non-payment/
short payment of tax/ erroneous refund of tax/ wrong availment/
utilisation of input tax credit].
In case of non-payment of self-assessed tax and the amount collected as
representing the tax, the only opportunity for paying the same without
incurring any penalty is, if it is paid, with interest, within 30 days from the
due date of payment. The option to pay such tax before issuance of SCN
or within 30 days of issuance of SCN and avoid penalty consequences is
not available. Penalty under sub-section (9) shall be payable where any

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 DEMANDS AND RECOVERY 19.11

amount of self-assessed tax or any amount collected as tax has not been
paid within a period of 30 days from the due date of payment of such
tax.
F. limit Time for passing adjudication order [Section 73(10)]
 The proper officer shall issue
the adjudication order within 3
years from the due date for
furnishing of Annual Return for
the Financial Year to which the
tax not paid/short paid/ITC
wrongly availed/utilised relates
to. In case of erroneously
granted refunds, such order should be passed within 3 years from
the date of erroneous refund.
 Section 44(1) of the CGST Act stipulates that annual return for a
financial year needs to be filed by 31st December of the next
financial year.
II. Non-payment/short payment etc. on account of fraud, wilful
misstatement or suppression of facts [Section 74]
A. Issue of SCN [Section 74(1)]
 In a case, where the non-
payment /short
payment/erroneous refund
/wrong availment/utilisation
of ITC is on account of any
fraud, wilful misstatement
or suppression of facts by
the person chargeable to
tax, proper officer shall
issue a notice, on the
person chargeable with
such tax, requiring him to show cause as to why he should not pay
the amount specified in the notice.
 The notice would specify the amount of tax along with interest
payable thereon under section 50 and a penalty equivalent to the
tax specified in the notice, liable to be paid by him. Needless to

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 19.12 GOODS AND SERVICES TAX

say, the notice should state the grounds based on which such
demand is raised, so that the person against whom the notice is
served is made aware of the basis of the demand.
B. Time limit to issue SCN [Section 74(2), (3) & (4) read with section
74(10)]
 The notice should be issued at least 6
months prior to the time limit for passing
the order determining the amount of tax,
interest and penalty payable by defaulter.
 The said order has to be passed within 5
years from the due date for furnishing the Annual Return for the
Financial Year to which the tax not paid/short paid/ITC wrongly
availed/utilised relates to or within 5 years from the date of
erroneous refund.

Thus, the time-limit for issuance of SCN is 4 years and 6 months

from the due date of filing of Annual Return for the Financial Year to
which the demand pertains or from the date of erroneous refund.
 Where a notice has been issued for any period on a person
chargeable with tax, if such person commits such default in some
other period also, instead of issuing a detailed notice, a mere
statement containing the details of tax not paid/short
paid/erroneously refunded/ITC wrongly availed/utilised for such
periods, can be issued.
 The Service of such Statement shall be deemed to be Service of
Notice on such person, subject to the condition that the grounds
relied upon in the said statement, except the ground of fraud, or any
wilful misstatement or suppression of facts to evade tax, for such tax
periods [as covered in the Statement] are the same as are mentioned
in the earlier notice.
C. Payment of tax before issuance of SCN [Section 74(5), (6) & (7)]
The law provides an opportunity to the person chargeable with tax to pay
tax, interest and penalty equivalent to 15% of such tax, before the
issuance of notice. It emphatically stipulates that in such cases, no notice
shall be issued and there shall be no other consequences for the default.
The detailed provisions are as under:

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 DEMANDS AND RECOVERY 19.13

 The person who is chargeable with tax, but has not paid the
tax/short paid the tax/wrongly availed/utilised the credit/been
granted an erroneous refund by reason of fraud etc., may voluntarily
come forward to pay such tax alongwith interest and specified
penalty before the issue of SCN/Statement, as the case may be.
 In such case, he has to pay the amount of tax along with interest
payable thereon under section 50 and a penalty equivalent to 15% of
such tax on the basis of his own ascertainment of such tax or the tax
as ascertained by the proper officer. Further, he needs to inform the
proper officer in writing of such payment.
 Such voluntary payment can be made even if the mistake is pointed
out by the Department, before issue of SCN.
 Where such voluntary payment is made, Department shall not serve
any SCN/Statement. The matter closes at this stage itself.
 After such person has voluntarily paid the tax along with interest and
penalty, if the proper officer is of the opinion that the amount
voluntarily paid falls short of the amount actually payable, he can
issue a SCN in respect of the amount which falls short of the amount
actually payable.
D. Payment of tax after issuance of SCN [Section 74(8)]
 Where a person is chargeable with tax not paid/short paid etc. and is
issued a notice/statement under this section for reasons of fraud
etc., misses the opportunity to pay the tax along with interest and
penalty equivalent to 15% of tax, before the issue of SCN resulting in
no SCN being issued thereafter, he has another chance to discharge
tax alongwith interest payable under section 50 and penalty
equivalent to 25% of tax within 30 days of issuance of SCN. All
proceedings in respect of the said SCN shall be deemed to be
concluded.
 In other words, where such person pays the tax demanded along
with interest payable under section 50 and a penalty equivalent to
25% of such tax within 30 days of issue of SCN, all proceedings in
respect of the said notice shall be deemed to be concluded.

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 19.14 GOODS AND SERVICES TAX

E. Adjudication order [Section 74(9) & (11)]

 Where an SCN/Statement is issued to a
person chargeable with tax, he may
furnish a representation to the proper
officer in his defense, if he is the view
that he is not so liable to pay
whole/part of the amount mentioned
in the SCN.
 The proper officer after considering the representation made by the
person, if any, pass an order, determining the amount of tax, interest
and penalty due from such person.
 Where any person served with an adjudication order pays the tax
along with interest payable thereon under section 50 and a penalty
equivalent to 50% of such tax within 30 days of communication of
the order, all proceedings in respect of the said notice shall be
deemed to be concluded.
F. Time limit for passing adjudication order [Section 74(10)]
 The proper officer shall issue the
adjudication order within 5 years
from the due date for furnishing
of Annual Return for the Financial
Year to which the tax not
paid/short paid/ITC wrongly
availed/utilised relates to. In case
of erroneously granted refunds,
such order should be passed within 5 years from the date of
erroneous refund.
Section 44(1) of the CGST Act stipulates that annual return for a
financial year needs to be filed by 31st December of the next
financial year.

I. For the purposes of section 73 and section 74:

(i) the expression “all proceedings in respect of the said notice” shall not
include proceedings under section 132;
(ii) where the notice under the same proceedings is issued to the main
person liable to pay tax and some other persons, and such proceedings

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 DEMANDS AND RECOVERY 19.15

against the main person have been concluded under section 73 or section 74,
the proceedings against all the persons liable to pay penalty under sections
122, 125, 129 and 130 are deemed to be concluded.
II. For the purposes of this Act, the expression “suppression” shall mean non-
declaration of facts or information which a taxable person is required to
declare in the return, statement, report or any other document furnished
under this Act or the rules made thereunder, or failure to furnish any
information on being asked for, in writing, by the proper officer.

The above provisions have been summarized in the following tables:

Table A:

S. No. Action by tax Amount of penalty payable Remarks

payer
Normal Cases Fraud Cases

1. Tax amount, along No penalty and 15% of the The penalty

with the interest, no notice shall tax amount shall also be
paid before be issued payable as not
issuance of notice penalty and chargeable in
no notice cases where
shall be not the self-
be issued assessed tax
or any
2. Tax amount, along No penalty. All 25% of the amount
with the interest, proceedings tax amount collected as
paid within 30 days deemed to be payable as tax is paid
of issuance of concluded penalty. All (with
notice proceedings interest)
deemed to within 30
be days from
concluded. the due date
of payment.
3. Tax amount, along 10% of the tax 50% of the
with the interest, amount or tax amount
paid within 30 days ` 10,000/-, payable as
of communication whichever is penalty. All
of order higher proceedings

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 19.16 GOODS AND SERVICES TAX

deemed to
be
concluded.

4. Tax amount, along 10% of the tax 100% of the

with the interest, amount or tax amount
paid after 30 days of ` 10,000/-,
communication of whichever is
order higher

Table B:

S. No. Nature of case Time for issuance Time for issuance of

of notice order

1. Normal Cases Within 2 years and 9 Within 3 years from the due
months from the due date of filing of Annual
date of filing Annual Return for the Financial
Return for the Year to which the demand
Financial Year to pertains or from the date of
which the demand erroneous refund
pertains or from the
date of erroneous
refund

2. Fraud Cases Within 4 years and 6 Within 5 years from the due
months from the due date of filing of Annual
date of filing of Return for the Financial
Annual Return for the Year to which the demand
Financial Year to pertains or from the date of
which the demand erroneous refund
pertains or from the
date of erroneous
refund

3. Any amount No time limit Within 1 year from the date

collected as tax of issue of notice [to be
but not paid discussed subsequently in

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 DEMANDS AND RECOVERY 19.17

this chapter]

4. Non- payment No need to issue a Recovery proceedings can

of self- assessed SCN be started directly [to be
tax discussed subsequently in
this chapter]

4. GENERAL PROVISIONS RELATING TO

DETERMINATION OF TAX [SECTION 75]
General provisions relating to determination of tax are contained in section 75 of
CGST Act. These provisions are applicable both in case of determination of tax
not paid/short paid/ erroneously refunded/ITC wrongly availed/ utilised whether
by reason of fraud/any wilful misstatement/suppression of facts or otherwise.
These provisions have been discussed are as follows:
A. Period of stay order to be excluded in computing the limitation
period [Section 75(1)]
Where the service of notice or issuance
of order is stayed by an order of a
Court or Appellate Tribunal, the period
of such stay shall be excluded in
computing the period for issuance of
notice and issuance of adjudication
order**, as the case may be.
**period as specified in sub-sections (2) and (10) of section 73 or sub-sections
(2) and (10) of section 74
B. In case charges of fraud/any wilful misstatement/suppression of
facts are not established for a notice issued in a fraud case, tax to be
determined deeming the demand notice to be issued in normal case
[Section 75(2)]
Where any Appellate Authority or Appellate Tribunal or court concludes that
the notice issued under section 74(1) is not sustainable for the reason that
the charges of fraud or any wilful misstatement or suppression of facts to
evade tax has not been established against the person to whom the notice
was issued, the proper officer shall determine the tax payable by such person,
deeming as if the notice were issued under section 73(1).

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 19.18 GOODS AND SERVICES TAX

C. Adjudication order issued in pursuance of Appellate Authority/

Appellate Tribunal/ Court’s direction be issued with 2 years [Section
75(3)]
Where any order is required to be issued in pursuance of the direction of the
Appellate Authority or Appellate Tribunal or a court, such order shall be
issued within 2 years from the date of communication of the said direction.
D. Opportunity of being heard [Section 75(4)]
An opportunity of hearing shall be granted where a request is received in
writing from the person chargeable with tax or penalty, or where any adverse
decision is contemplated against such person.
Adjournment of hearing to grant time to person chargeable with tax
[Section 75(5)]
The proper officer shall, if sufficient cause is shown by the person chargeable
with tax, grant time to the said person and adjourn the hearing for reasons to
be recorded in writing.
However, such adjournment shall be granted for a maximum of 3 times to a
person during the proceedings.
E. Adjudication order should be a
speaking order [Section 75(6)]
The proper officer, in his order,
shall set out the relevant facts and
the basis of his decision.
F. Tax, interest and penalty
demanded in order not to exceed amount specified in notice [Section
75(7)]

The amount of tax, interest and penalty demanded in the order shall not be
in excess of the amount specified in the notice and no demand shall be
confirmed on the grounds other than the grounds specified in the notice.

G. In case of modification of tax by the Appellate

Authority/Tribunal/Court, penalty and interest to be modified
accordingly [Section 75(8)]

Where the Appellate Authority or Appellate Tribunal or court modifies the

amount of tax determined by the proper officer, the amount of interest and

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 DEMANDS AND RECOVERY 19.19

penalty shall stand modified accordingly, taking into account the amount of
tax so modified.

H. Payment of interest mandatory even if not specified in the

adjudication order [Section 75(9)]

The interest on the tax short paid or not paid shall be payable whether or not
specified in the order determining the tax liability.

I. Adjudication order to be passed mandatorily within stipulated time

[Section 75(10)]

The GST law ensures timely disposal of cases by providing that if the
adjudication order is not issued within the stipulated time limit of 3 years in
normal cases or 5 years in fraud cases, as the case may be, the adjudication
proceedings shall be deemed to be concluded.

J. In case of appeal filed by Department against prejudicial decision of

the Appellate Authority/Appellate Tribunal/High Court, period
between the date of decision of the higher authority and that of the
lower authority to be excluded [Section 75(11)]

An issue on which the Appellate Authority or the Appellate Tribunal or the

High Court has given its decision which is prejudicial to the interest of
revenue in some other proceedings and an appeal to the Appellate Tribunal
or the High Court or the Supreme Court against such decision of the
Appellate Authority or the Appellate Tribunal or the High Court is pending,
the period spent between the date of the decision of the Appellate Authority
and that of the Appellate Tribunal or the date of decision of the Appellate
Tribunal and that of the High Court or the date of the decision of the High
Court and that of the Supreme Court shall be excluded in computing the time
limit for passing adjudication order, where proceedings are initiated by way
of issue of a SCN under the sections 73 and 74.

K. Amount of self-assessed tax or interest remaining unpaid to be

recovered under section 79 [Section 75(12)]

Notwithstanding anything contained in section 73 or section 74, where any

amount of self-assessed tax in accordance with a return furnished under
section 39 remains unpaid, either wholly or partly, or any amount of interest

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 19.20 GOODS AND SERVICES TAX

payable on such tax remains unpaid, the same shall be directly recovered
under the provisions of section 79 [discussed subsequently in this chapter].

L. In case of penalty being imposed under section 73/74, no other

penalty to be imposed for the same act/omission [Section 75(13)]

Where any penalty is imposed under section 73 or section 74, no penalty for
the same act or omission shall be imposed on the same person under any
other provision of this Act.

5. TAX COLLECTED BUT NOT DEPOSITED

[SECTION 76]
The provisions of this section
are based on the principle that
nobody should be unjustly
enriched in the name of
Revenue. If any amount is
collected in the name of tax,
the same must be deposited
with the Government.
Such situation may arise in case
where tax is collected on
supplies on which the tax is
leviable, but such tax is not
deposited with the Government
or where tax is collected on
supplies on which tax is not leviable at all, and thus, tax collected is not deposited
with the Government.
The detailed provisions of this section have been discussed hereunder:

A. Amount representing tax collected from any person to be paid to the

Central Government [Section 76(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

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 DEMANDS AND RECOVERY 19.21

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.
B. Issue of SCN [Section 76(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.
C. Determination of amount due [Section 76(3)]

The proper officer shall, after considering the representation, if any, made by
the person on whom SCN is served, determine the amount due from such
person and thereupon such person shall pay the amount so determined.
D. Interest payable on the amount [Section 76(4)]
 The person who has collected any amount as representing the tax, but
not deposited the same with the Government shall in addition to paying
the said amount determined by the proper officer shall also be liable to
pay interest thereon.
 Interest is payable at the rate specified under section 50.
 Interest is payable from the date such amount was collected by him to
the date such amount is paid by him to the Government.
E. Opportunity of being heard [Section 76(5)]
An opportunity of hearing shall be granted where a request is received in
writing from the person to whom SCN was issued.
F. Time limit for issuance of order [Section 76(6) & (7)]

The proper officer shall issue an order within 1 year from the date of issue of
the notice.
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
1 year.

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 19.22 GOODS AND SERVICES TAX

G. Order must be a speaking order [Section 76(8)]

The proper officer, in his order, shall set out the relevant facts and the basis
of his decision.
H. Adjustment of amount payable under section 76(1) and (3) [Section
76(9), (10) & (11)]
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).

Where any surplus is left after the adjustment under sub-section (9), the
amount of such surplus shall either be credited to the Consumer Welfare
Fund or refunded to the person who has borne the incidence of such amount.
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.

6. TAX WRONGFULLY COLLECTED AND PAID

TO CENTRAL GOVERNMENT OR STATE
GOVERNMENT [SECTION 77]
A registered person who has paid the
CGST and SGST or, as the case may be,
the CGST and the UTGST on a
transaction considered by him to be an
intra-State supply, but which is
subsequently held to be an inter-State
supply, shall be refunded the amount of
taxes so paid in such manner and subject
to such conditions as may be prescribed.
A registered person who has paid IGST
on a transaction considered by him to be an inter-State supply, but which is
subsequently held to be an intra-State supply, shall not be required to pay any
interest on the amount of CGST and SGST or, as the case may be, the CGST and
the UTGST tax payable.
Similar provisions are contained in section 19 of the IGST Act, 2017.

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 DEMANDS AND RECOVERY 19.23

7. RECOVERY PROCEEDINGS [SECTIONS 78 & 79]

The recovery proceedings are final steps towards the realisation of any tax or
amount, which has been confirmed as payable after following the due process of
adjudication by the proper officer. These recovery provisions under the CGST Act,
2017 lay down a well-defined procedure which is as follows:
A. Initiation of recovery proceedings [Section 78]
Any amount payable by a taxable
person in pursuance of an order passed
under this Act must be paid by such
person within a period of 3 months
from the date of service of such order.
If a taxable person fails to dos so,
recovery proceedings are initiated
against him.
However, where the proper officer considers it expedient in the interest of
revenue, he may, for reasons to be recorded in writing, require the said
taxable person to make such payment within such period less than a period
of 3 months as may be specified by him.
B. Recovery of tax [Section 79]
If the payable amount is not paid by a person within the specified time limit
of 3 months, recovery proceedings shall be initiated and various actions may
be taken by the recovery officer, for realisation of Government dues.
The options for recovery of Government dues include deduction of money
from any amount payable to such tax payer, detaining and selling any goods,
directing any other person from whom the money is due to such person,
attaching any property belonging to the defaulter etc.
MODES OF RECOVERY OF TAX [SECTION 79(1)]
Where any amount payable by a person
to the Government under any of the
provisions of this Act or the rules made
thereunder is not paid, the proper
officer shall proceed to recover the
amount by one or more of the
following modes, namely:

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 19.24 GOODS AND SERVICES TAX

(i) Recovery by deduction from any money owed [Section 79(1)(a) read
with rule 143]
The proper officer may deduct or may require any other specified officer
to deduct the amount so payable from any money owing to such person
[referred as ‘defaulter’] which may be under the control of the proper
officer or such other specified officer.

Specified officer shall mean any officer of the Central Government or a

State Government or the Government of a Union territory or a local
authority, or of a Board or Corporation or a company owned or
controlled, wholly or partly, by the Central Government or a State
Government or the Government of a Union territory or a local authority.

(ii) Recovery by sale of goods under the control of proper officer

[Section 79(1)(b) read with rule 144]
 The proper officer may recover or may require any other specified
officer to recover the amount so payable from a defaulter by
detaining and selling any goods [through a process of auction,
including e-auction] belonging to such person which are under the
control of the proper officer or such other specified officer.
 The proper officer shall prepare an inventory and estimate the
market value of such goods and proceed to sell only so much of the
goods as may be required for recovering the amount payable along
with the administrative expenditure incurred on the recovery
process.
 Where the defaulter pays the amount under recovery, including any
expenses incurred on the process of recovery, before the issue of the
notice for auction, the proper officer shall cancel the process of
auction and release the goods.
(iii) Garnishee proceedings - Recovery from a third person [Section
79(1)(c) read with rule 145]
 The proper officer may, by a notice in prescribed form, in writing,
require any other person:
 from whom money is due/may become due to such person or
 who holds/may subsequently hold money for/on account of
such person

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 DEMANDS AND RECOVERY 19.25

to pay to the Government

 either forthwith upon the money becoming due or being held, or
 within the time specified in the notice not being before the
money becomes due or is held,
so much of the money as is sufficient to pay the amount due from
such person or the whole of the money when it is equal to or less
than that amount.
 Every person to whom the notice is issued hereunder shall be bound
to comply with such notice.
 Where any such notice is issued to a post office, banking company
or an insurer, it shall not be necessary to produce any pass book,
deposit receipt, policy or any other document for the purpose of any
entry, endorsement or the like being made before payment is made,
notwithstanding any rule, practice or requirement to the contrary.
 In case the person to whom notice is issued hereunder, fails to make
the payment in pursuance thereof to the Government, he shall be
deemed to be a defaulter in respect of the amount specified in the
notice and all the consequences of this Act or the rules made
thereunder shall follow.
 The officer issuing such notice may, at any time, amend or revoke
the notice or extend the time for making any payment in pursuance
of the notice.
 Any person making any payment in compliance with the notice
issued hereunder shall be deemed to have made the payment under
the authority of the person in default.
 Further, such payment being credited to the Government shall be
deemed to constitute a good and sufficient discharge of the liability
of such person to the person in default to the extent of the amount
specified in the receipt.
 Any person discharging any liability to the person in default after
service on him of the notice shall be personally liable to the
Government to the extent of the liability discharged or to the extent
of the liability of the person in default for tax, interest and penalty,
whichever is less.

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 19.26 GOODS AND SERVICES TAX

 Where a person on whom a notice is served hereunder proves to the

satisfaction of the officer issuing the notice that:
 the money demanded/any part thereof was not due to the
person in default or
 he did not hold any money for/on account of the person in
default, at the time the notice was served on him, nor is the
money demanded or any part thereof, likely to become due to
the said person/be held for/on account of such person,
nothing contained in this section shall be deemed to require the
person on whom the notice has been served to pay to the
Government any such money or part thereof.
 Where the third person makes the payment of the amount specified
in the notice, the proper officer shall issue a certificate in prescribed
form to the third person clearly indicating the details of the liability
so discharged.
(iv) Recovery by sale of movable/immovable property [Section 79(1)(d)
read with rules 147, 148, 149, 150 and 154]
 The proper officer may, in accordance with the rules to be made in
this behalf, distrain any movable or immovable property belonging
to or under the control of such person, and detain the same until the
amount payable is paid; and in case, any part of the said amount
payable or of the cost of the distress or keeping of the property,
remains unpaid for a period of 30 days next after any such distress,
may cause the said property to be sold [through auction including e-
auction] and with the proceeds of such sale, may satisfy the amount
payable and the costs including cost of sale remaining unpaid and
shall render the surplus amount, if any, to such person [Section
79(1)(d)].
 The proper officer shall prepare a list of movable and immovable
property belonging to the defaulter, estimate their value as per the
prevalent market price and issue an order of attachment or distraint
and a notice for sale prohibiting any transaction with regard to such
movable and immovable property as may be required for the
recovery of the amount due.

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 DEMANDS AND RECOVERY 19.27

In case of attachment/distraint
of

an immovable property order shall be affixed on the

property till the
confirmation of sale

a movable property proper officer shall seize

the property and take its
custody.

 Stamp duty/any other tax/fee payable on transfer of such property

shall be paid by the transferee to the Government.
 Any property in a debt not secured by a negotiable instrument, a
share in a corporation, or other movable property not in the
possession of the defaulter except for property deposited in/in the
custody of any Court shall be attached in the manner provided in
rule 151 [discussed subsequently in this chapter].
 Where any claim is preferred/any objection is raised with regard to
the attachment/distraint of any property by a person claiming that
he had some interest in/was in possession of, the property in
question, proper officer shall investigate the same and postpone the
sale till such time.
If proper officer finds merit in his claims/objection upon
investigation, proper officer will release the property, wholly or
partly. Otherwise, the proper officer will reject the claim and
proceed with the process of sale through auction.
 Where the defaulter pays the amount under recovery, including any
expenses incurred on the process of recovery, before the issue of the
notice for auction, the proper officer shall cancel the process of
auction and release the goods.
 The amounts so realised from the sale of goods, movable or
immovable property, for the recovery of dues from a defaulter shall,:-
(a) first, be appropriated against the administrative cost of the
recovery process;
(b) next, be appropriated against the amount to be recovered;

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 19.28 GOODS AND SERVICES TAX

(c) next, be appropriated against any other amount due from the
defaulter under the CGST Act or the IGST Act or the UTGST Act
or any of the SGST Act and the rules made thereunder; and
(d) any balance, be paid to the defaulter.
 Where the property to be sold is a negotiable instrument or a share
in a corporation, the proper officer may, instead of selling it by
public auction, sell such instrument or a share through a broker and
the said broker shall deposit to the Government so much of the
proceeds of such sale, reduced by his commission, as may be
required for the discharge of the amount under recovery and pay the
amount remaining, if any, to the owner of such instrument or a
share.
 Any officer/other person who has a duty to perform in connection
with such sale will not acquire any interest in property sold.
 No such sale will take place on Sundays/other general holidays
recognized by Government.
 Proper officer may seek assistance from jurisdictional police station.
(v) Recovery as arrears of land revenue [Section 79(1)(e) read with rule
155]
 The proper officer may prepare a certificate in prescribed form
signed by him specifying the amount due from such person and
send it to the Collector of the district in which such person owns any
property or resides or carries on his business or to any officer
authorised by the Government and the said Collector or the said
officer, on receipt of such certificate, shall proceed to recover from
such person the amount specified thereunder as if it were an arrear
of land revenue.
(vi) Recovery as fine imposed by Magistrate [Section 79(1)(f) read with
rule 156]
Notwithstanding anything contained in the Code of Criminal Procedure,
1973, the proper officer may file an application to the appropriate
Magistrate in prescribed form to recover from the person concerned the
amount specified thereunder and such Magistrate shall proceed to
recover from such person amount specified thereunder as if it were a fine
imposed by him.

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 DEMANDS AND RECOVERY 19.29

(vii)Recovery through execution of a decree, etc. [Rule 146]

Where any amount is payable to the defaulter in the execution of a
decree of a Civil Court for the payment of money or for sale in the
enforcement of a mortgage or charge, the proper officer shall send a
request to the said court and the court shall, subject to the provisions of
the Code of Civil Procedure, 1908, execute the attached decree, and
credit the net proceeds for settlement of the amount recoverable.
(viii)Recovery through surety [Rule 157]
Where any person has become surety for the amount due by the
defaulter, he may be proceeded against under this Chapter as if he were
the defaulter.
(ix) Recovery from company in liquidation [Rule 160]
Where the company is under liquidation as specified in section 88, the
Commissioner shall notify the liquidator for the recovery of any amount
representing tax, interest, penalty or any other amount due under the Act
in prescribed form.
Other provisions governing recovery of tax [Section 79(2), (3) & (4)]
 Where the terms of any bond or other instrument executed under this Act or
any rules or regulations made thereunder provide that any amount due under
such instrument may be recovered in the manner laid down in sub-section
(1), the amount may, without prejudice to any other mode of recovery, be
recovered in accordance with the provisions of that sub-section [Section
79(2)].
 Where any amount of tax, interest or penalty is payable by a person to the
Government under any of the provisions of this Act or the rules made
thereunder and which remains unpaid, the proper officer of State tax or
Union territory tax, during the course of recovery of said tax arrears, may
recover the amount from the said person as if it were an arrear of State tax or
Union territory tax and credit the amount so recovered to the account of the
Government [Section 79(3)].
 Where the amount recovered under sub-section (3) is less than the amount
due to the Central Government and State Government, the amount to be
credited to the account of the respective Governments shall be in proportion
to the amount due to each such Government [Section 79(4)].

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 19.30 GOODS AND SERVICES TAX

8. PAYMENT OF TAX AND OTHER AMOUNT IN

INSTALMENTS [SECTION 80]
Considering various business aspects,
the provisions for payment of all such
amounts, other than self-assessed tax, in
instalments have also been made in the
Act.
A person can avail this benefit of
payment in instalments, by making an
application to the Commissioner by
specifying reasons for such request.
On receipt of application, the Commissioner may allow the payment of amount in
instalments, subject to maximum 24 monthly instalments and on payment of
applicable interest.
If there is default in payment of any one instalment then the whole outstanding
balance shall become due and payable immediately.
Provisions of section 80 read alongwith rule 158 of the CGST Rules, 2017 have
been explained in detail as under:
 A taxable person, seeking extension of time for the payment of taxes or any
amount due under the Act or for allowing payment of such taxes or amount
in instalments, shall furnish an application for the same in prescribed form.
 Commissioner shall call for a report from the jurisdictional officer about the
financial ability of the taxable person to pay the said amount.
 Commissioner may, upon consideration of the same, for reasons to be
recorded in writing, extend the time for payment or allow payment of any
amount due under this Act, other than the amount due as per the liability
self-assessed in any return, by such person in monthly instalments not
exceeding 24, subject to payment of interest under section 50 and subject to
such conditions and limitations as may be prescribed.
 However, where there is default in payment of any one instalment on its due
date, the whole outstanding balance payable on such date shall become due
and payable forthwith and shall, without any further notice being served on
the person, be liable for recovery.

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 DEMANDS AND RECOVERY 19.31

 Facility of payment in instalments not allowed in certain cases: The

facility of payment in instalments shall not be allowed where -
(a) the taxable person has already defaulted on the payment of any amount
under the CGST Act or IGST Act or UTGST Act or any of the SGST Act, for
which the recovery process is on;
(b) the taxable person has not been allowed to make payment in instalments
in the preceding financial year under the Act or the IGST Act or UTGST
Act or any of the SGST Act;
(c) the amount for which instalment facility is sought is less than ` 25,000.

9. TRANSFER OF PROPERTY TO BE VOID IN

CERTAIN CASES [SECTION 81]
 Where a person, after any amount
has become due from him, creates a
charge on or parts with the property
belonging to him or in his
possession by way of sale,
mortgage, exchange, or any other
mode of transfer whatsoever of any
of his properties in favour of any
other person with the intention of
defrauding the Government revenue, such charge or transfer shall be void as
against any claim in respect of any tax or any other sum payable by the said
person.
 However, such charge or transfer shall not be void if it is made for adequate
consideration, in good faith and without notice of the pendency of such
proceedings under this Act or without notice of such tax or other sum
payable by the said person, or with the previous permission of the proper
officer.

10. TAX TO BE FIRST CHARGE ON PROPERTY

[SECTION 82]
Notwithstanding anything to the contrary contained in any law for the time being
in force, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016,
any amount payable by a taxable person or any other person on account of tax,

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 19.32 GOODS AND SERVICES TAX

interest or penalty which he is liable to pay to the Government shall be a first

charge on the property of such taxable person or such person.

11. PROVISIONAL ATTACHMENT TO PROTECT

REVENUE IN CERTAIN CASES [SECTION 83]
 Where during the pendency of
any proceedings under section
62 or section 63 or section 64 or
section 67 or section 73 or
section 74, the Commissioner is
of the opinion that for the
purpose of protecting the
interest of the Government
revenue, it is necessary so to do,
he may, by order in writing
attach provisionally any property, including bank account, belonging to the
taxable person in such manner as may be prescribed [Section 83(1)].
 Every such provisional attachment shall cease to have effect after the expiry
of a period of one year from the date of the order made under sub-section
(1) [Section 83(2)].
The related provisions contained in CGST Rules are as follows:
(i) Provisional attachment of property [Rule 159]
 Where the Commissioner decides to attach any property, including bank
account in accordance with aforesaid provisions, he shall pass an order to
that effect mentioning therein, the details of property which is attached.
 The Commissioner shall send a copy of the order of attachment to the
concerned Revenue Authority or Transport Authority or any such
Authority to place encumbrance on the said movable or immovable
property, which shall be removed only on the written instructions from
the Commissioner to that effect.
 Where the property attached is of perishable or hazardous nature, and if
the taxable person pays:
(i) an amount equivalent to the market price of such property
or

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 DEMANDS AND RECOVERY 19.33

(ii) the amount that is or may become payable by the taxable person
whichever is lower
then such property shall be released forthwith, by an order in prescribed
form, on proof of payment.
 However, where the taxable person fails to pay the amount referred
above in respect of the said property of perishable/hazardous nature, the
Commissioner may dispose of such property and the amount realized
thereby shall be adjusted against the tax, interest, penalty, fee or any
other amount payable by the taxable person.
 Any person whose property is attached may within 7 days of the
attachment, file an objection to the effect that the property attached was
or is not liable to attachment, and the Commissioner may, after affording
an opportunity of being heard to the person filing the objection, release
the said property by an order.
 The Commissioner may, upon being satisfied that the property was, or is
no longer liable for attachment, release such property by issuing an
order.
(ii) Attachment of debts and shares, etc. [Rule 151]
 A debt not secured by a negotiable instrument, a share in a corporation,
or other movable property not in the possession of the defaulter except
for property deposited in, or in the custody of any court shall be attached
by a written order in prescribed form prohibiting:
(a) in the case of a debt, the creditor from recovering the debt and the
debtor from making payment thereof until the receipt of a further
order from the proper officer;
(b) in the case of a share, the person in whose name the share may be
standing from transferring the same or receiving any dividend thereon;
(c) in the case of any other movable property, the person in possession
of the same from giving it to the defaulter.
 A copy of such order shall be affixed on some conspicuous part of the
office of the proper officer, and another copy shall be sent, in the case of
debt, to the debtor, and in the case of shares, to the registered address
of the corporation and in the case of other movable property, to the
person in possession of the same.

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 19.34 GOODS AND SERVICES TAX

 A debtor, prohibited hereunder, may pay the amount of his debt to the
proper officer, and such payment shall be deemed as paid to the
defaulter.
(iii) Attachment of property in custody of courts or Public Officer [Rule 152]
 Where the property to be attached is in the custody of any Court or
Public Officer, the proper officer shall send the order of attachment to
such court or officer, requesting that such property, and any interest or
dividend becoming payable thereon, may be held till the recovery of the
amount payable.
(iv) Attachment of interest in partnership [Rule 153]
 Where the property to be attached consists of an interest of the
defaulter, being a partner, in the partnership property, the proper officer
may make an order charging the share of such partner in the partnership
property and profits with payment of the amount due under the
certificate, and may, by the same or subsequent order, appoint a receiver
of the share of such partner in the profits, whether already declared or
accruing, and of any other money which may become due to him in
respect of the partnership, and direct accounts and enquiries and make
an order for the sale of such interest or such other order as the
circumstances of the case may require.
 The other partners shall be at liberty at any time to redeem the interest
charged or, in the case of a sale being directed, to purchase the same.

12. CONTINUATION AND VALIDATION OF

CERTAIN RECOVERY PROCEEDINGS [SECTION
84]
Where any notice of demand in respect of any tax, penalty, interest or any other
amount payable under this Act, (hereafter in this section referred to as
Government dues), is served upon any taxable person or any other person and
any appeal or revision application is filed or any other proceedings is initiated in
respect of such Government dues, then:
(a) where such Government dues are enhanced in such appeal, revision or other
proceedings, the Commissioner shall serve upon the taxable person or any
other person another notice of demand in respect of the amount by which
such Government dues are enhanced and any recovery proceedings in

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 DEMANDS AND RECOVERY 19.35

relation to such Government dues as are covered by the notice of demand

served upon him before the disposal of such appeal, revision or other
proceedings may, without the service of any fresh notice of demand, be
continued from the stage at which such proceedings stood immediately
before such disposal;
(b) where such Government dues are reduced in such appeal, revision or in other
proceedings ––
(i) it shall not be necessary for the Commissioner to serve upon the taxable
person a fresh notice of demand;
(ii) the Commissioner shall give intimation of such reduction to him and to
the appropriate authority with whom recovery proceedings is pending;
(iii) any recovery proceedings initiated on the basis of the demand served
upon him prior to the disposal of such appeal, revision or other
proceedings may be continued in relation to the amount so reduced
from the stage at which such proceedings stood immediately before such
disposal.

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 19.36 GOODS AND SERVICES TAX

TEST YOUR KNOWLEDGE

1. Mohan Enterprises is entitled for exemption from tax under GST law. However,
it collected tax from its buyers worth ` 50,000 in the month of August. It has
not deposited the said amount collected as GST with the Government. You are
required to brief to Mohan Enterprises the consequences of collecting tax, but
not depositing the same with Government as provided under section 76 of the
CGST Act, 2017.

2. Discuss briefly the time limit for issue of show cause notice as contained under
sections 73 and 74 of the CGST Act, 2017.

3. Is there any time limit prescribed for adjudication of the cases under CGST Act,
2017? If yes, discuss the same.

4. A person is chargeable with tax in case of fraud. He decides to pay the amount
of demand alongwith interest before issue of notice. Is there any immunity
available to such person?

5. Briefly discuss the modes of recovery of tax available to the proper officer.

ANSWERS/HINTS
1. It is mandatory to pay amount, collected from other person representing tax
under GST law, to the Government. Every person who has collected from any
other person any amount as representing the tax under GST law, 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.
For any such amount not so paid, proper officer may issue SCN for recovery
of such amount and penalty equivalent to amount specified in notice.
The proper officer shall, after considering the representation, if any, made by
the person on whom SCN is served, determine the amount due from such
person and thereupon such person shall pay the amount so determined
alongwith interest 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.

© The Institute of Chartered Accountants of India

 DEMANDS AND RECOVERY 19.37

2. The provisions relating to ‘relevant date’ as contained in CGST Act, 2017 are
as under:

(i) In case of section 73 (cases other than fraud/suppression of facts/willful

misstatement), the time-limit for issuance of SCN is 2 years and 9 months
from the due date of filing Annual Return for the Financial Year to which
the demand pertains or from the date of erroneous refund.
(ii) In case of section 74 (cases involving fraud/suppression of facts/willful
misstatement), the time-limit for issuance of SCN is 4 years and 6 months
from the due date of filing of Annual Return for the Financial Year to
which the demand pertains or from the date of erroneous refund.
3. The provisions relating to time-limit for adjudication of cases as contained in
section 73 and 74 of the CGST Act, 2017 are as under:
(i) In case of section 73 (cases other than fraud/suppression of facts/willful
misstatement), the time limit for adjudication of cases is 3 years from the
due date for filing of annual return for the financial year to which
demand relates to [Section 73(10)].
(ii) In case of section 74 (cases of fraud/suppression of facts/willful
misstatement), the time limit for adjudication is 5 years from the due
date for filing of annual return for the financial year to which demand
relates to [Section 74(10)].

4. Yes. Person chargeable with tax, shall have an option to pay the amount of
tax along with interest and penalty equal to 15% per cent of the tax involved,
as ascertained either on his own or ascertained by the proper officer, and on
such payment, no notice shall be issued with respect to the tax so paid
[Section 74(6)].
5. The proper officer may recover the dues in following manner:
(a) Deduction of dues from the amount owned by the tax authorities
payable to such person.
(b) Recovery by way of detaining and selling any goods belonging to such
person;
(c) Recovery from other person, from whom money is due or may become
due to such person or who holds or may subsequently hold money for or

© The Institute of Chartered Accountants of India

 19.38 GOODS AND SERVICES TAX

on account of such person, to pay to the credit of the Central or a State

Government;

(d) Distrain any movable or immovable property belonging to such person,

until the amount payable is paid. If the dues not paid within 30 days, the
said property is to be sold and with the proceeds of such sale the
amount payable and cost of sale shall be recovered.
(e) Through the Collector of the district in which such person owns any
property or resides or carries on his business, as if it was an arrear of land
revenue.
(f) By way of an application to the appropriate Magistrate who in turn shall
proceed to recover the amount as if it were a fine imposed by him.
(g) By enforcing the bond/instrument executed under this Act or any rules or
regulations made thereunder.
(h) CGST arrears can be recovered as an arrear of SGST and vice versa
[Section 79].

© The Institute of Chartered Accountants of India