INTRODUCTION - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

CHAPTER X RECOVERY OF TAX 1. INTRODUCTION 1.1. The recovery proceedings are final step towards realisation of any tax or amount. This Chapter deals with the law and procedure relating to recovery of the unpaid GST dues, including interest, penalties and late fees. The provisions of the CGST Act, 2017 and the CGST Rules, 2017, relevant to this Chapter are as under Sr. No. Section / Rules Provision pertaining to 1. Section 75 General provisions relating to determination of tax 2. Section 78 Initiation of recovery proceedings 3. Section 79 Recovery of tax 4. Section 80 Payment of tax and other amount in instalments 5. Section 81 Transfer of property to be void in certain cases 6. Section 82 Tax to be first charge on property 7. Section 83 Provisional attachment to protect revenue in certain cases 8. Section 84 Continuation and validation of certain recovery proceedings 9. Section 85 Liability in case of transfer of business 10. Section 86 Liability of agent and principal 11. Section 87 Liability in case of amalgamation or merger of companies 12. Section 88 Liability in case of company in liquidation 13. Section 89 Liability of directors of private company 14. Section 90 Liability of partners of firm to pay tax 15. Section 91 Liability of guardians, trustees, etc. 16. Section 92 Liability of Court of Wards, etc. 17. Section 93 Special provisions regarding liability to pay tax, interest or penalty in certain cases 18. Section 94 Liability in other cases 19. Section 119 Sums due to be paid notwithstanding appeal, etc. 20. Rule 142 Notice and order for demand of amounts payable 21. Rule 142 A Procedure for recovery of dues under existing laws 22. Section 161 Rectification of errors apparent on the face of record 23. Rule 88C Manner of dealing with difference in liability reported in statement of outward supplies and that reported in return. 24. Rule 88D Intimation by electronic means regarding excess availment of ITC by taxpayer 25. Rule 143 Recovery by deduction from any money owed 26. Rule 144 Recovery by sale of goods under the control of proper officer 27. Rule 144 A Recovery of penalty by sale of goods or conveyance detained or seized in transit 28. Rule 145 Recovery from a third person 29. Rule 146 Recovery through execution of a decree 30. Rule 147 Recovery by sale of movable or immovable property 31. Rule 148 Prohibition against bidding or purchase by officer 32. Rule 150 Assistance by police 33. Rule 151 Attachment of debts and shares, etc. 34. Rule 152 Attachment of property in custody of courts or Public Officer 35. Rule 153 Attachment of interest in partnership 36. Rule 154 Disposal of proceeds of sale of goods and movable or immovable property 37. Rule 155 Recovery through land revenue authority 38. Rule 156 Recovery through court 39. Rule 157 Recovery from surety 40. Rule 158 Payment of tax and other amounts in instalments 41. Rule 159 Provisional attachment of property 42. Rule 160 Recovery from company in liquidation 1.2. The provisions, Forms, Circulars, Notification, etc., can be seen by clicking ctrl+click on the respective hyperlink, which will open the https://taxinformation.cbic.gov.in page. On clicking GST option on the Menu bar, Information-GST page will appear, below which the option of Act, Rules, Notification, etc. is provided. The required page of the relevant provision/Form/Circular/Notification can be seen by clicking the appropriate option. 1.3. GST law mandates payment of tax on supply of goods and/or services by the taxpayers. The tax self-assessed by the taxpayer has to be paid by due date prescribed under the CGST Act, 2017. There may be a situation where the tax dues are not paid correctly by the tax payers, either inadvertently or deliberately. 1.4. The provisions of CGST Act, 2017 and the rules made thereunder contain elaborate provisions to safeguard the revenue due to the Government. In case of any failure to pay the tax dues to the Government appropriate provisions have been incorporated in the GST law for recovery of such unpaid tax by following the procedure and guidelines stipulated in the CGST Act, 2017 and the rules made thereunder. 1.5. The statutory provisions providing for recovery of the Central Tax dues under the GST law are contained in Section 78 to 83 of the CGST Act, 2017 and Rules 142 to 161 of the CGST Rules, 2017. These legal provisions of recovery contained in the CGST Act, 2017 can broadly be divided in the following three parts: I. When the recovery proceeding can be started by tax officer (Section 78) II. The various modes of the recovery of the dues (Section 79) III. Protective measures to safeguard the interest of Revenue (Section 80 to 83). 1.6. There are no independent provisions for recovery of tax dues of IGST, interest thereon and penalties. However, Section 20 of the IGST Act, 2017 provides for applicability of the provisions of CGST Act, 2017 relating to demands and recovery, offences and penalties and other miscellaneous provisions. Thus, the recovery of dues under IGST Act, 2017 can be made under the relevant provisions of CGST Act, 2017 read with Section 20 of the IGST Act, 2017 and the CGST Rules, 2017. Similarly, for recovery of dues under GST (Compensation to States) Act, 2017, Section 11 of GST (Compensation to States) Act provides for applicability of the provision of CGST Act, 2017 to intra-state supplies and for applicability of the provision of IGST Act, 2017 to inter-state supplies. 1.7. In order to comply with the principles of natural justice, the GST law lays down certain procedures to be followed before taking action for recovery of the tax and other amounts like, interest, penalty, late fees, etc. One such procedure is raising demand and determination of the short-paid or not-paid tax, wrongly availed input tax credit and erroneously refunded amount in the prescribed manner, which is being disputed by the taxpayer. The details of the manner prescribed to demand and determine the short-paid or not-paid tax, wrongly availed input tax credit and erroneously refunded amount has been elaborately dealt in the Chapter on Demand and Determination thereof . 1.8. The GST law also contains provisions to encourage voluntary compliance, wherein if the tax dues and the mandatory interest thereof are paid within the time period prescribed in the law, then no penalty or lesser penalty, as applicable, is charged. The law provides an opportunity for payment of tax, interest and a nil or nominal penalty (depending on nature of offence) before issuance of Notice and stipulates that in all such cases no Notice shall be issued and consequently there shall be no other consequences for recovery of the default. 1.9. Even after issuance of a show cause notice, there is another chance to discharge tax and interest liability with applicable penalty (depending on nature of offence) voluntarily within 30 days of issuance of the Notice. If all dues are paid within 30 days then the GST law provides that all proceedings in respect of such Notice shall be deemed to be concluded. Thus, there are sufficient opportunities to correct the errors made and discharge the tax liability with nil or nominal penalties. 1.10. The taxpayer is required to self-assess his tax liability on the supplies made in the course of business or in furtherance of business. Such self-assessed tax is an undisputed tax liability as the same is determined by the taxpayer himself as payable to the Government. As per Section 75 of CGST Act, 2017, where there s any unpaid self-assessed tax, it can be recovered without issuing any show-cause notice and the proceedings for recovery as provided under Section 79 of the CGST Act, 2017 can be directly invoked. 1.11. GST is paid at the time of filing GSTR-3B return and this return cannot be filed unless and until the tax payable declared in the return is not paid fully. There is a possibility that the taxpayer shows higher sales in the GSTR-1 return, wherein the invoice wise details of the sales/supplies is declared, so as to pass on excess ITC to the recipient and under-reports the supplies while declaring in GSTR-3B for evading the tax. For dealing with such situations the Explanation to Section 75(12) of the CGST Act, 2017 clarifies that the self-assessed tax would include the GST payable for outward supplies reported in the GSTR-1 but not included in the GSTR-3B return. In such cases, the recovery proceedings can be directly invoked under Section 79 of the CGST Act, 2017 for recovering the self-assessed tax and interest thereof. 1.12. If the tax dues and other amounts confirmed as payable after following the due process of adjudication by the proper officer remain unpaid, despite all these beneficial provisions mentioned above, and the tax payer fails to pay the dues after the orders are passed and statutory limit for appeal is over and no appeal is filed, then such dues are considered as arrears and the proper officer may initiate recovery proceedings in terms of Section 79 of the CGST Act, 2017 for recovery of arrears.