Limitation period for Recovery of amount under Section 79

[Pooja Agarwal]

Dear Experts,

Please guide if there is any limitation period for recovery of interest amount under section 79 as well. In our case the department proposes to recover the interest for FY 2017-18 u/s 79 of the act vide notice (DRC 01D) dt. 01.07.2025 

We do not agree to the interest demand, as the amount was available in Electronic Cash Ledger and only the return was filed after the due date (with late fee); there are various legal precedents in our support and the law has been amended as well, however neither the department is accepting our submissions nor the department not issuing SCN DRC 01A or DRC 01 (despite specific request), and has issued present DRC-01D.

Please guide

[Rajan Kumar and associates]

The Proper officer issued DRC 01D as per Rule 142B of CGST Rules, 2017, which is a correct method. He need not to issue DRC-01 for the recovery of Interest. I hope the liability arises due to self assessed liability.

[KASTURI SETHI]

Interest is automatic in this scenario.Regarding various precedents, each case has different facts & circumstances. Read the meaning of   "self-assessment" deeply.

[VENU K]

The Gujarat High Court, in Reliance Formulation Private Limited vs Assistant Commissioner of State Tax & Anr, - 2025 (7) TMI 1066 - GUJARAT HIGH COURT has held in the matter of interest recovery that issue of DRC 01D is mandatory. The court has also held that 

As per Section 50(1) of the GST Act, interest is payable on delayed payment of self-assessed tax, and such interest must be calculated in accordance with Rule 88B of the GST Rules.

If there is a dispute about the amount of interest demand then it needs to be adjudicated. Only Courts will be able to help you in my opinion. DRC 01D will go for recovery after 7 days as per Rule 142B.


 

[KASTURI SETHI]

In this scenario, the self-assessment statutorily chains the assessee for payment of interest under Section 79 of CGST Act.

[Sadanand Bulbule]

Limitaion applies to raising of demand under Section 73/74/74A. But not for recovery of arrears under Section 79.

[KASTURI SETHI]

Dear Sir Ji,

Message is as clear as sunshine. How Sections i.e. 79 AND 73/74/74A operate discretely has been explained in a lucid style.    

[Sadanand Bulbule]

Sirji, much obliged by your hypnotic inspirational words. 

AI Summary

Interest on self-assessed tax: recovery may proceed via DRC 01D notice and is not barred without adjudication. Interest on delayed payment of self-assessed tax is automatically payable and recoverable; issuance of a recovery notice in the prescribed format (DRC 01D) under the recovery procedure is a proper mode to initiate recovery, which may proceed after the statutory notice period. Disputed interest amounts require adjudication to determine liability and computation, and limitation applicable to raising demands under assessment provisions does not necessarily bar recovery of arrears including interest.