RECOVERY OF TAX UNDER GST LAW.

The statutory provisions in relation to demand and recovery are provided in the Central Goods and Service Tax Act, 2017 (in short, CGST Act, 2017) as follows:

The recovery proceedings are the 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. Therefore, if the tax dues and other amounts remain unpaid, despite these beneficial provisions, and the tax payer fails to pay the dues after the orders are passed and the statutory limit of 3 months is over, then the proper officer may initiate recovery proceedings. These recovery provisions under the CGST Act, 2017 lay down a well defined procedure which is as follows:-

1. Any amount payable, in pursuance to any order passed in this matter, is required to be paid within 3 months from the date of receipt of order and the tax payer should pay the same within this time limit. However, it may be mentioned that in certain cases, considering the interest of revenue, this period of 3 months may be reduced.
2. If the payable amount is not paid within the specified time limit of 3 months then 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, by detaining and selling any goods, by directing any other person from whom the money is due to such person, attaching any property belonging to the defaulter etc.

However, 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. Here it may be noted that if there is default in payment of any one instalment, then the whole outstanding balance shall become due and payable immediately.

Initiation of recovery proceedings (Section 78)

78. Any amount payable by a taxable person in pursuance of an order passed under this Act shall be paid by such person within a period of three months from the date of service of such order failing which recovery proceedings shall be initiated:

Provided that 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 three months as may be specified by him.

Section 78 of CGST Act, 2017 provides for provision in relation to initiations of recovery proceedings where demand has been confirmed.

Accordingly, the demand shall be payable by the taxable person within a period of 3 months from the date of service of the order. The proper officer shall initiate recovery proceedings if the tax demand is not paid within 3 months from the date of service of the order.

Section 78 of the CGST Act, 2017 provides that after passing of an order under the Act, the taxable person is required to deposit the amount of demand within 3 months of date of service of such order to him.

Where the proper officer consider it expedient in the interest of revenue, he may for reasons to be recorded in writing may require the taxable person to pay the demanded amount within a period shorter than 3 months as he may decide.

Section 78 of the CGST Act, 2017 provides that in case of failure of taxable person to deposit the amount within permitted time, the proper officer may initiate the recovery proceedings for recovery of such amount from taxable person.

Recovery Proceedings in GST

• Recovery proceedings can be initiated by a proper officer under section 78 of CGST Act, 2017
• As a general rule, any amount payable by taxable person shall be paid within a period of three months from the date of service of order.
• Amount payable shall only be in pursuance of order passed under GST law.
• Amount involved in recovery shall be any amount viz, tax, interest, penalty, fee etc.
• Such amount must be payable by a taxable person in pursuance of an order.
• Who should pay - taxable person.
• When to be paid - within 3 months of service of order of demand
• 3 months are to be counted from date of service of order, not from the date of order.
• No recovery of any amount can be made where matter is at the SCN stage only.
• There should be a confirmed demand to initiate recovery proceedings.
• What if not paid- recovery proceedings to be initiated.
• Proper officer for recovery is jurisdictional Deputy / Assistant Commissioner of Central Tax.

Recovery before stipulated time

The proper officer may require the taxable person to pay the demand within a shorter period than the prescribed three months if:

1. Proper officer considers it expedient to do so
2. It is in the interest of revenue
3. Reasons are recorded in writing

Recovery of arrears under existing law

Under the erstwhile pre GST tax regime, recovery of arrears of indirect taxes used to be in the following form:

1. Recovery of arrears of wrongly availed cenvat credit
2. Recovery of cenvat credit carried forward wrongly to GST regime
3. Recovery of arrears of central excise duty
4. Recovery of arrears of service tax
5. Recovery of arrears due to revision of return pertaining to pre GST regime

The recovery of such arrears is required to be made under the GST law for which CBIC has issued procedural guidelines for recovery of arrears videCircular No. 42/16/2018-GST, dated 13.04.2018, covering the following :

• Recovery of central excise duty, service tax or wrongly availed CENVAT credit thereof under the existing law and inadmissible transitional credit.
• Recovery of interest, penalty and late fee payable
• Payment of central excise duty & service tax on account of returns filed for the past period
• Recovery of arrears from assessees under the existing law in cases where such assessees are not registered under the CGST Act, 2017:

Applicable Rules and Forms

Applicable Rules

Rule 142A of CGST Rules, 2017 inserted w.e.f. 30.10.2018 provides for procedure for recovery of these under existing laws i.e., laws which existed at the time of introduction of GST in the country (prior to 01.07.2017). The demand for recovery is required to be uploaded on common portal along with summary thereof.

Applicable Forms

Account to rule 142A of CGST Rules, 2017, following forms are required to be used for various purposes and are to be filed online: