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Recovery Proceedings Under GST

Nov 06, 2017

A taxpayer should pay any amount payable in pursuance of an order passed under CGST Act within 3 months from the date of service of such order failing which recovery proceedings will be initiated. If the proper officer considers it expedient in the interest of revenue, he can, for reasons to be recorded in writing, require the said taxable person in GST to make such payment within any period less than a period of three months as may be specified by him.

Section 79 contains various modes for recovery:

  • Deduction from refunds or any other monies payable by the government to the defaulter;
  • Detaining and selling goods of the defaulter under the control of any officer;
  • Garnishment notice can be issued to debtors of the defaulter or to any person who holds money for or on account of the defaulter to forthwith pay the same to the Government. If the garnishee fails to pay the monies, he will be deemed to be a defaulter. If the garnishee pays the amount, the defaulter will be held to be discharged to the extent of the payment. The garnishee may prove that he is not a debtor or that he is not holding any money on account of or for the defaulter and in such a case he would no longer be liable for payment of any monies to the government;
  • Di-straining any movable or immovable property belonging to or under control of the defaulter and sale of the same;
  • Recovery as arrears of land revenue.

Payment in Installments:

Section 80 of the CGST Act allows the Commissioner to extend the time for payment of tax arrears or even grant installments for payment. Installments cannot be granted where the tax is self-assessed by the taxpayer as due to the Government. Installments are also limited to 24 monthly installments. Any default in payment of any one installment will make the taxpayer liable to pay tax on the entire balance amount forthwith.

Transfer of Property to be Void in Certain Cases:

Section 81 declares that 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 favor 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.

Tax to be First Charge on Property:

According to Section 82, any amount payable by a taxable person or any other person on account of 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.

Provisional Attachment:

Provisional attachment powers are provided for under Section 83. If, during the tendency of any proceedings under Section 62, 63, 64, 67, 73, 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. Powers of provisional attachment are draconian in nature and are not to be invoked as a matter of routine. The requirements of this section must be strictly complied with before any provisional attachment is levied.

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