RECOVERY OF TAX UNDER MODEL GST LAW

[Mr. M. GOVINDARAJAN]

Payment of tax due

Section 71 of the Model GST Law (‘Law’ for short) provides that any amount payable by a taxable person in pursuance of an order passed under the Act shall be paid by such person within a period of 90 days from the date of service of such order.   The proper officer is at his discretion to direct to pay the said amount within such short period as may be specified by him in the interest of revenue.  The reasons for such order shall be recorded in writing.

Recovery of tax

Section 72 provides that if the taxable person fails to pay the tax payable consequent on any order within 90 days, the proper officer shall proceed to recover the amount.  The amount may be recovered by any one of the following methods-

• 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 which may be under the control of the proper officer or such other specified officer;
• The proper officer or any other specified officer may detain and sell any goods belonging to such person which are under the control of proper officer or such other specified officer;
• The proper officer may require any other person from-

• Whom money is due or may become due to such person; or
• who holds or may subsequently hold money for or on account such person,

to pay to the credit of the Central or a State Government either forthwith upon the money becoming due or being held, or at or within the specified time prescribed 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 the amount;

• Every person who receives such notice shall be bound to comply with such notice;
• Where 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 payment is made, notwithstanding any rule, practice or requirement to the contrary;
• If such person fails to make the payment 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 rules made there under shall follow;
• The officer issuing such a notice may amend or revoke such notice at any timeor from time to time or extend the time for making any payment in pursuance of the notice;
• Any person making any payment in compliance with a notice shall be deemed to have made payment under the authority of the person in default;
• Such payment being credited to the appropriate 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 himof the notice shall be personally liable to the appropriate 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;
• If a person who received the notice proves to the satisfaction of the officer issuing the notice, that the money demanded or any part thereofwas not due to the person in default or that he did not hold any money for or on account of the person in default at the time of notice was served on him or nothing is likely to become due in future, he shall not require to pay the amount demanded in the notice;

• The proper officer, on an authorization by the competent authority, may distrain any moveable or immovable property of such person and detain the same until the amount is paid.In case any part of the amount payable or the cost of the distress or keeping of the property remains unpaid for a period of 30 days may sell the property and satisfy the amount for the dues and the remaining amount, if any, may be paid to the taxable person;
• The proper officer may issue a certificate to the District Collect to recover the amountas if it is an arrear of land revenue;
• The proper officer may file an application to the appropriate Magistrate and such Magistrate shall proceed to recover from such person the amount specified there under as if it were a fine imposed by him;

Section 72(2) provides that where the terms of any bond or other instrument executed under the Act or any rules or regulations made there under provide that any amount due under such instrument may be recovered without prejudice to any other mode of recovery;

Section 72(3) provides that where any amount of tax, interest or penalty is payable, the proper Officer of SGST, during the course of recovery of SGST arrears, may recover the amount from the said person as if it were an arrear of SGST and credit the amount so recovered to the account of Central Government.  Similar provision is there for the proper officer of CGST to recover the dues of SGST, as if it were an arrear of CGST and credit the amount so recovered to the account of the State Government.

Section 72(4) provides that the amount recovered,  either by SGST officer or CGST officer, is less than the amount due, then such amount may be accounted proportionately to the amount due to each such Government.

Bar on recovery proceedings

Section 73 provides that if an appeal is filed by the taxable person then the proper officer may not proceed to recover the tax payable.  If there is no appeal before the First Appellate Authority, then there is no bar on the proper officer to proceed to recover the tax due.

Installments

Section 74 provides that the Commissioner/Chief Commissioner may on an application filed by a taxable person may extend the time for payment or allow payment in monthly installments not exceeding 24, subject to payment of interest with such restrictions and conditions as may be prescribed.  Where there is default in payment of any installment 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.

Transfer of property to be void

Section 75 provides that if a taxable person creates a charge on or parts with the property belonging to him or in his possession, in favor of any other person with the intention to defraud 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.  Such charge or transfer shall not be void if it is made for adequate consideration 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.

First charge

Section 76 provides that 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 appropriate Government, be a first charge on the property of such taxable person or such other person.

Provisional attachment

Section 77 provides where during the pendency of the proceedings, the Commissioner is of the opinion that to protect the interest of Revenue, it is necessary so to do, he may by order in writing attach provisionally any property belonging to the taxable person in such manner as may be prescribed.

Continuation and validation   of certain recovery proceedings

Section 78 provides that where any notice of demand is served upon any taxable person and any appeal, revision, application is filed or other proceedings is initiated against such dues then-

• Where such dues are enhanced, the Commissioner shall serve upon the taxable person another notice of demand only in such enhanced amount and the recovery proceedings may be continued from the stage at which such proceedings stood immediately before such disposal;
• Where such amounts are reduced in such appeal, revision or in other proceedings, it is not necessary for the Commissioner to serve a fresh notice of demand;
• The Commissioner may inform of such reduction to him and to the appropriate authority with whom recovery proceedings is pending;
• The recovery proceedings may be continued in relation to the amount so reduced from the state at which such proceedings stood immediately before such disposal.

Discussions to this article

[Ganeshan Kalyani]

Nice article sir.

Section 72 (3) provides that the proper officer of CGST can collect tac due by the assessee under SGST and credit it to the the appropriate govt. How the said provision would be implemented in practice.

[MARIAPPAN GOVINDARAJAN]

Rules are to be made in this regard by both Central and State Governments.