1.

INTRODUCTION
 Though it is the duty of every taxable person to assess and pay his GST
liabilities voluntarily, tax administration occasionally comes across situations
where the tax dues are not paid correctly by the tax payers. While in most
of these cases, such non-payment is due to the bonafide belief of the
person that his activities do not attract any tax liability under the GST law; or
he is entitled to certain exemption, etc., in some cases, such non-payment is
deliberate with an intention to evade payment of such tax.
 To minimize the inadvertent short payment of taxes, the concept of
‘matching’ the details of ‘outward supplies’ of supplier with the details of
‘inward supplies’ of recipient has been introduced in the GST Act.
 Moreover, the self-assessed tax has to be paid by the due date prescribed
under the GST law and in case of any failure to pay the same by the due
date, the Input Tax Credit (ITC) will not be available to customers and also
the tax payer will not be able to file any return for further period. Effectually,
these provisions work as a self-policing system and take care of any mis-
match in the payment of taxes.
 However, despite these provisions, there may arise some instances where
the tax was not paid correctly. To deal with such situations, Revenue must
be empowered to demand the tax liability and recover such tax from the
defaulter.
 On one hand, there is a dire need to have a robust demand and recovery
mechanism in place in order to empower the Revenue to exercise said
powers, at the same time, care must also be taken that there should not be
arbitrary exercise of such powers by the Revenue and same should be
appropriately regulated.

 Accordingly, the GST law contains elaborate

provisions for the recovery of tax under
various situations, which can be broadly
classified into following two categories:
 Tax short paid or
erroneously refunded or Non-payment of self-assessed
ITC wrongly availed tax or amount collected as
representing the tax

 Chapter XV of the CGST Act 2017 [Sections 73 to 84] and Chapter XVIII
[Rules 142 to 161] of the CGST Rules, 2017 contains various provisions
relating to demands and recovery.

Provisions of demands and recovery under CGST Act have also been
made applicable to IGST Act vide section 20 of the IGST Act.

Before proceeding to understand the demands and recovery provisions, let

us first go through few relevant definitions.

2. RELEVANT DEFINITIONS

 Adjudicating authority means any authority, appointed or authorised to pass

any order or decision under this Act, but does not include the Central Board
of Indirect Taxes and Customs, the Revisional Authority, the Authority for
Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate
Authority, the Appellate Tribunal and the Authority referred to in sub-section
(2) of section 171 [Section 2(4)].

 Appellate Authority: means an authority appointed or authorised to hear

appeals as referred to in section 107 [Section 2(8) of the CGST Act].

 Appellate Tribunal: means the Goods and Services Tax Appellate Tribunal
constituted under section 109 [Section 2(9) of the CGST Act].

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 Commissioner: means the Commissioner of central tax and includes the
Principal Commissioner of central tax appointed under section 3 and the
Commissioner of integrated tax appointed under the Integrated Goods and
Services Tax Act [Section 2(24) of the CGST Act].

 Market value: shall mean the full amount which a recipient of a supply is
required to pay in order to obtain the goods or services or both of like kind
and quality at or about the same time and at the same commercial level
where the recipient and the supplier are not related [Section 2(73) of the
CGST Act].

 Proper officer: in relation to any function to be performed under this Act,

means the Commissioner or the officer of the central tax who is assigned that
function by the Commissioner in the Board [Section 2(91) of the CGST Act].

3. DETERMINATION OF TAX NOT PAID/SHORT

PAID/ERRONEOUSLY REFUNDED/ITC
WRONGLY AVAILED/ UTILISED [SECTION 73
& SECTION 74]
 Section 73 and section 74 of the CGST Act deal
with the manner in which the tax liability of a
person should be determined in case of short
payment/ non-payment of tax/ erroneous refund/
wrong availment/ utlisation of ITC.

 The incidence of short payment/non-payment of tax or erroneous refund or

wrong availment/utilisation of ITC may be because of an inadvertent
bonafide mistake (Normal Cases) or it may be a deliberate attempt (Fraud
Cases) to evade the tax. Since the nature of offence is totally different in
both the incidences, hence, under GST law, separate provisions for recovery
of the tax and the amount of penalty have been made to deal with such
type of cases. Besides these, there are provisions to encourage voluntary
compliance such as no penalty or lesser penalty if the tax dues along with
interest, are paid within the specified time limit/ incidence.
 Limitation period: One of the fundamental legal
principles is that an element of certainty must be
brought to the legal proceedings. The law of
limitation is based on this principle. Any action
under any law has to be taken within the limitation
period prescribed otherwise uncertainty would
prevail eternally.

The provisions of limitation period gain all the more importance in the
legislation dealing with indirect taxes, where the tax burden is to be passed
on to the next level at every stage.
Therefore, a tax law must have a limitation period, beyond which demands
cannot be raised. Further, while a lesser time limit is available to the
Revenue to raise the demand in normal cases, it would have a longer limitation
period available to raise the demand in fraud cases.
 Show Cause Notice (SCN): In order to adhere to the principles of natural
justice, before raising any tax demand, a notice has to be issued (generally
referred to as Show Cause Notice), asking the person chargeable with tax to
show cause as to why the specified amount of tax should not be demanded
from him. The issuance of SCN grants an opportunity to such person to
defend himself before adjudication.

The person to whom such notice has been issued can contest the demand
by filing a reply to the show cause notice and also by appearing before the
adjudicating authority personally. After considering the reply filed by the
person as well as the submissions made during the personal hearing, the
adjudicating authority shall pass a speaking order, either confirming the tax
demand or dropping the same.
The provisions contained in section 73 and section 74 have been discussed
in detail below.
I. Non-payment/short payment etc. on account of reasons other than
fraud, wilful misstatement or suppression of facts [Section 73]
A. Issue of SCN [Section 73(1)]
 In a case, where the non-payment/
short payment/ erroneous refund/
wrong availment/ utilisation of ITC is

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 on account of reasons other than fraud, wilful misstatement or
suppression of facts by the person chargeable with tax, the
proper officer shall issue a notice, on the person chargeable
such tax, requiring him to show cause as to why he should not
pay the amount specified in the notice.
 The notice would specify the amount of tax along with interest
payable thereon under section 50 [@ 18% p.a.*] and a penalty
leviable under the provisions of this Act or the rules made
thereunder, liable to be paid by him. Needless to say, the notice
should state the grounds based on which such demand is raised,
so that the person against whom the notice is served is made
aware of the basis of the demand.
* as notified by Notification No. 13/2017 CT dated 28.06.2017
B. Time limit to issue SCN [Section 73(2), (3) & (4) read with section
73(10)]
 The notice should be issued at least 3
months prior to the time limit specified
for passing the order determining the
amount of tax, interest and any penalty
payable by defaulter.
 The order referred herein has to be passed within 3 years from
the due date for furnishing the Annual Return for the Financial
Year to which the tax not paid/short paid/ITC wrongly
availed/utilised relates to or within 3 years from the date of
erroneous refund.

Thus, the time-limit for issuance of SCN is 2 years and 9

months from the due date of filing Annual Return for the
Financial Year to which the demand pertains or from the date of
erroneous refund.
 Where a notice has been issued for any period on a person
chargeable with tax, if such person commits such default in
some other period also, instead of issuing a detailed notice, a
mere statement containing the details of tax not paid/short
paid/erroneously refunded/ITC wrongly availed/utilised for such
periods, can be issued.
  The Service of such Statement shall be deemed to be Service of
SCN on such person, subject to the condition that the grounds
relied upon for such tax periods [as covered in the Statement]
are the same as are mentioned in the earlier notice.
C. Payment of tax before issuance of SCN [Section 73(5), (6) & (7)]
The law provides an opportunity to the person chargeable with tax to
pay tax and interest before the issuance of notice. It emphatically
stipulates that in such cases, no notice shall be issued and there shall
be no other consequences (including penalty) for the default. The
detailed provisions are as under:
 The person who is chargeable with tax, but has not paid the tax,
or short paid the tax or wrongly availed/utilized the credit, or
been granted an erroneous refund, may voluntarily come
forward to pay such tax alongwith interest before the issue of
SCN/Statement, as the case may be.
 In such case, he has to pay the amount of tax along with interest
payable thereon under section 50 on the basis of his own
ascertainment of such tax or the tax as ascertained by the proper
officer. Further, he needs to inform the proper officer in writing
of such payment.
 Such voluntary payment can be made even if the mistake is
pointed out by the Department, before issue of SCN.
 Where such voluntary payment is made, Department shall not
serve any SCN/Statement. The matter closes at this stage itself
and no penalty is imposed on the person.
 The option of paying tax and interest before issuance of SCN
so as to avoid the issuance of SCN and penalty is available in
only those cases where any tax has not been paid/short
paid/erroneously refunded/ITC wrongly availed/utilized for
reasons other than fraud or any wilful misstatement or
suppression of facts to evade tax.
 After the person has voluntarily paid the tax along with interest,
if the proper officer is of the opinion that the amount voluntarily
paid falls short of the amount actually payable, he can issue a
SCN in respect of the amount which falls short of the amount
actually payable.

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D. Payment of tax after issuance of SCN [Section 73(8)]
 Where a person is chargeable with tax not paid/short paid etc.
and is issued a notice/statement under this section, misses the
opportunity to pay the tax along with interest before the issue of
SCN resulting in SCN not being issued thereafter and no penalty
being imposed, he has another chance to discharge the tax with
interest payable under section 50 with nil penalty within 30 days
of issuance of SCN. All proceedings in respect of the said SCN
shall be deemed to be concluded.
 In other words, where such person pays the tax demanded along
with interest payable under section 50 within 30 days of issue of
SCN, no penalty shall be payable and all proceedings in respect
of the said notice shall be deemed to be concluded.
E. Adjudication order [Section 73(9) & (11)]
 Where an SCN/Statement is issued to a
person chargeable with tax, he may
furnish a representation to the proper
officer in his defense, if he is the view
that he is not so liable to pay whole/part
of the amount mentioned in the SCN.
 The proper officer after considering the representation made by
the person, if any, pass an order, determining the amount of tax,
interest and penalty** due from such person.
**Quantum of penalty

10% of tax
Quantum
of penalty
`10,000

 The quantum of penalty will remain same whether the tax

amount, alongwith interest is paid within 30 days of the
communication of the order or after 30 days.
 **Notwithstanding anything contained in sub-section (6) or sub-
section (8), penalty under sub-section (9) shall be payable where
any amount of self-assessed tax or any amount collected as tax
has not been paid within a period of 30 days from the due date of
payment of such tax.

From the above, it is clear that the non-payment of self-assessed tax

or the amount collected as representing the tax has been treated
differently than the other non/short payments as referred in section
73(1) [non payment/ short payment of tax/ erroneous refund of tax/
wrong availment/ utilisation of input tax credit].

In case of non-payment of self-assessed tax and the amount collected

as representing the tax, the only opportunity for paying the same
without incurring any penalty is, if it is paid, with interest, within 30
days from the due date of payment. The option to pay such tax before
issuance of SCN or within 30 days of issuance of SCN and avoid
penalty consequences is not available. Penalty under sub-section (9)
shall be payable where any amount of self-assessed tax or any amount
collected as tax has not been paid within a period of 30 days from the
due date of payment of such tax.

Clarification on levy of penalty under section 73 of the CGST Act

in case of delayed filing of return
Issue: Whether penalty in accordance with section 73(11) of the CGST
Act should be levied in cases where the return in Form GSTR- 3B has
been filed after the due date of filing such return?
Clarification: The provisions of section 73(11) of the CGST Act can be
invoked only when the provisions of section 73 are invoked and the
provisions of section 73 of the CGST Act are generally not invoked in
case of delayed filing of the return in FORM GSTR-3B because tax
along with applicable interest has already been paid.

It is accordingly clarified that penalty under the provisions of section

73(11) of the CGST Act is not payable in such cases. It is further
clarified that since the tax has been paid late in contravention of the
provisions of the CGST Act a general penalty

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 under section 125 of the CGST Act may be imposed after following
the due process of law [Circular No. 76/50/2018 GST dated
31.12.2018]
F. Time limit for passing adjudication order [Section 73(10)]

 The proper officer shall issue the

adjudication order within 3 years from
the due date for furnishing of Annual
Return for the Financial Year to which
the tax not paid/short paid/ITC wrongly
availed/utilised relates to. In case of erroneously granted
refunds, such order should be passed within 3 years from the
date of erroneous refund.
 Section 44(1) of the CGST Act stipulates that annual return for a
financial year needs to be filed by 31st December of the next
financial year.
II. Non-payment/short payment etc. on account of fraud, wilful
misstatement or suppression of facts [Section 74]
A. Issue of SCN [Section 74(1)]
 In a case, where the non-payment /short
payment/erroneous refund /wrong
availment/utilisation of ITC is on account of
any fraud, wilful misstatement or suppression of facts by the
person chargeable to tax, proper officer shall issue a notice, on the
person chargeable with such tax, requiring him to show cause as to
why he should not pay the amount specified in the notice.
 The notice would specify the amount of tax along with interest
payable thereon under section 50 and a penalty equivalent to
the tax specified in the notice, liable to be paid by him.
Needless to say, the notice should state the grounds based on
which such demand is raised, so that the person against whom
the notice is served is made aware of the basis of the demand.
 B. Time limit to issue SCN [Section 74(2), (3) & (4) read with section
74(10)]
 The notice should be issued at least 6
months prior to the time limit for passing
the order determining the amount of tax,
interest and penalty payable by defaulter.
 The said order has to be passed within 5 years from the due
date for furnishing the Annual Return for the Financial Year to
which the tax not paid/short paid/ITC wrongly availed/utilised
relates to or within 5 years from the date of erroneous refund.

Thus, the time-limit for issuance of SCN is 4 years and 6 months

from the due date of filing of Annual Return for the Financial Year
to which the demand pertains or from the date of erroneous
refund.
 Where a notice has been issued for any period on a person
chargeable with tax, if such person commits such default in
some other period also, instead of issuing a detailed notice, a
mere statement containing the details of tax not paid/short
paid/erroneously refunded/ITC wrongly availed/utilised for such
periods, can be issued.
 The Service of such Statement shall be deemed to be Service of
Notice on such person, subject to the condition that the grounds
relied upon in the said statement, except the ground of fraud, or
any wilful misstatement or suppression of facts to evade tax, for
such tax periods [as covered in the Statement] are the same as
are mentioned in the earlier notice.
C. Payment of tax before issuance of SCN [Section 74(5), (6) & (7)]
The law provides an opportunity to the person chargeable with tax to
pay tax, interest and penalty equivalent to 15% of such tax, before the
issuance of notice. It emphatically stipulates that in such cases, no
notice shall be issued and there shall be no other consequences for
the default. The detailed provisions are as under:
 The person who is chargeable with tax, but has not paid the
tax/short paid the tax/wrongly availed/utilised the credit/been
granted an erroneous refund by reason of fraud etc., may
voluntarily come forward to pay such tax alongwith interest and

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 specified penalty before the issue of SCN/Statement, as the case
may be.
 In such case, he has to pay the amount of tax along with interest
payable thereon under section 50 and a penalty equivalent to
15% of such tax on the basis of his own ascertainment of such
tax or the tax as ascertained by the proper officer. Further, he
needs to inform the proper officer in writing of such payment.
 Such voluntary payment can be made even if the mistake is
pointed out by the Department, before issue of SCN.
 Where such voluntary payment is made, Department shall not
serve any SCN/Statement. The matter closes at this stage itself.
 After such person has voluntarily paid the tax along with interest
and penalty, if the proper officer is of the opinion that the
amount voluntarily paid falls short of the amount actually
payable, he can issue a SCN in respect of the amount which falls
short of the amount actually payable.
D. Payment of tax after issuance of SCN [Section 74(8)]
 Where a person is chargeable with tax not paid/short paid etc.
and is issued a notice/statement under this section for reasons
of fraud etc., misses the opportunity to pay the tax along with
interest and penalty equivalent to 15% of tax, before the issue of
SCN resulting in no SCN being issued thereafter, he has another
chance to discharge tax alongwith interest payable under section
50 and penalty equivalent to 25% of tax within 30 days of
issuance of SCN. All proceedings in respect of the said SCN shall be
deemed to be concluded.
 In other words, where such person pays the tax demanded along
with interest payable under section 50 and a penalty equivalent to
25% of such tax within 30 days of issue of SCN, all proceedings in
respect of the said notice shall be deemed to be concluded.
E. Adjudication order [Section 74(9) & (11)]
 Where an SCN/Statement is issued to a
person chargeable with tax, he may
furnish a representation to the proper
officer in his defense, if he is the view that
 he is not so liable to pay whole/part of the amount mentioned in
the SCN.
 The proper officer after considering the representation made by
the person, if any, pass an order, determining the amount of tax,
interest and penalty due from such person.
 Where any person served with an adjudication order pays the tax
along with interest payable thereon under section 50 and a
penalty equivalent to 50% of such tax within 30 days of
communication of the order, all proceedings in respect of the
said notice shall be deemed to be concluded.
F. Time limit for passing adjudication order [Section 74(10)]
 The proper officer shall issue the
adjudication order within 5 years from the
due date for furnishing of Annual Return
for the Financial Year to which the tax not
paid/short paid/ITC wrongly
availed/utilised relates to. In case of
erroneously granted refunds, such order should be passed within
5 years from the date of erroneous refund.
Section 44(1) of the CGST Act stipulates that annual return for a
financial year needs to be filed by 31st December of the next
financial year.

I. For the purposes of section 73 and section 74:

(i) the expression “all proceedings in respect of the said notice” shall
not include proceedings under section 132;
(ii) where the notice under the same proceedings is issued to the main
person liable to pay tax and some other persons, and such proceedings
against the main person have been concluded under section 73 or section
74, the proceedings against all the persons liable to pay penalty under
sections 122, 125, 129 and 130 are deemed to be concluded.
II. For the purposes of this Act, the expression “suppression” shall mean non-
declaration of facts or information which a taxable person is required to
declare in the return, statement, report or any other document furnished
under this Act or the rules made thereunder, or failure to furnish any
information on being asked for, in writing, by the proper officer.

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The above provisions have been summarized in the following tables:
Table A:

S. No. Action by tax Amount of penalty payable Remarks

payer
Normal Cases Fraud Cases

1. Tax amount, along No penalty 15% of the The penalty

with the interest, and no notice tax amount shall also be
paid before shall be issued payable as not
issuance of notice penalty and chargeable
no notice in cases
shall be not where the
be issued self-assessed
tax or any
2. Tax amount, along No penalty. All 25% of the amount
with the interest, proceedings tax amount collected as
paid within 30 days deemed to be payable as tax is paid
of issuance of concluded penalty. All (with
notice proceedings interest)
deemed to within 30
be days from
concluded. the due date
3. Tax amount, along 10% of the tax 50% of the of payment.
with the interest, amount or tax amount
paid within 30 days ` 10,000/-, payable as
of communication whichever is penalty. All
of order higher proceedings
deemed to
be
concluded.

4. Tax amount, along 10% of the tax 100% of the

with the interest, amount or tax amount
paid after 30 days ` 10,000/-,
of communication whichever is
of order higher
 Table B:

S. No. Nature of Time for issuance of Time for issuance of

case notice order

1. Normal Cases Within 2 years and 9 Within 3 years from the

months from the due due date of filing of
date of filing Annual Annual Return for the
Return for the Financial Financial Year to which
Year to which the the demand pertains or
demand pertains or from the date of
from the date of erroneous refund
erroneous refund

2. Fraud Cases Within 4 years and 6 Within 5 years from the

months from the due due date of filing of
date of filing of Annual Annual Return for the
Return for the Financial Financial Year to which
Year to which the the demand pertains or
demand pertains or from the date of
from the date of erroneous refund
erroneous refund

3. Any amount No time limit Within 1 year from the

collected as tax date of issue of notice
but not paid [to be discussed
subsequently in this
chapter]

4. Non- payment No need to issue a SCN Recovery proceedings

of self- can be started directly
assessed tax [to be discussed
subsequently in this
chapter]

Monetary limits prescribed for issuance of SCNs by different level of officers

Board has assigned the officers mentioned in table below, the functions as the
proper officers in relation to issue of SCNs and orders under sections 73 and 74

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of the CGST Act1, up to the prescribed monetary limits of tax (including cess)
not paid/ short paid/ erroneously refunded/ ITC of CGST wrongly
availed/utilized for issuance of SCNs and passing of orders under sections 73
and 74 of CGST Act:

CGST Officer Monetary limit of Monetary limit of Monetary limit of

CGST IGST CGST and IGST

Superintendent Not exceeding Not exceeding Not exceeding

of Central Tax ` 10 lakh ` 20 lakh ` 20 lakh

Deputy or Above ` 10 lakh Above ` 20 lakh Above ` 20 lakh

Assistant and not exceeding and not exceeding and not exceeding
Commissioner ` 1 crore ` 2 crores ` 2 crores
of Central Tax

Additional or Above ` 1 crore Above ` 2 crores Above ` 2 crores

Joint without any limit without any limit without any limit
Commissioner
of Central Tax

The central tax officers of Audit Commissionerates and Directorate General of

Goods and Services Tax Intelligence (hereinafter referred to as “DGGSTI”) shall
exercise the powers only to issue SCNs. An SCN issued by them shall be
adjudicated by the competent central tax officer of the Executive
Commissionerate in whose jurisdiction the noticee is registered.
In case SCNs have been issued on similar issues to a noticee(s) and made
answerable to different levels of adjudicating authorities within a
Commissionerate, such SCNs should be adjudicated by the adjudicating authority
competent to decide the case involving the highest amount of central tax and/or
integrated tax (including cess) [Circular No. 31/05/2018 GST dated 09.02.2018]
 7. RECOVERY PROCEEDINGS [SECTIONS 78 & 79]
The recovery proceedings are 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. These recovery provisions under the CGST Act,
2017 lay down a well-defined procedure which is as follows:

A. Initiation of recovery proceedings [Section 78]

Any amount payable by a taxable person in
pursuance of an order passed under this Act must
be paid by such person within a period of 3 months
from the date of service of such order. If a taxable
person fails to dos so, recovery proceedings are initiated against him.
However, 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 3 months as may be specified by him.

B. Recovery of tax [Section 79]

If the payable amount is not paid by a person within the specified time limit
of 3 months, recovery proceedings shall be initiated and various actions
may be taken by the recovery officer, for realisation of Government dues.
Recovery of taxes can also be made from distinct persons [referred to in
section 25(4) & (5)2] present in different States/ UTs.

The options for recovery of Government dues include deduction of money

from any amount payable to such tax payer, detaining and selling any

2
Concept of distinct persons has been explained in detail in Chapter 2 – Supply under GST.

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goods, directing any other person from whom the money is due to such
person, attaching any property belonging to the defaulter etc.
MODES OF RECOVERY OF TAX [SECTION 79(1)]
Where any amount payable by a person to the
Government under any of the provisions of this Act
or the rules made thereunder is not paid, the
proper officer shall proceed to recover the amount
by one or more of the following modes, namely:
(i) Recovery by deduction from any money owed [Section 79(1)(a)
read with rule 143]
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 [referred as ‘defaulter’] which may be under the control of
the proper officer or such other specified officer.

Specified officer shall mean any officer of the Central Government or

a State Government or the Government of a Union territory or a local
authority, or of a Board or Corporation or a company owned or
controlled, wholly or partly, by the Central Government or a State
Government or the Government of a Union territory or a local
authority.

(ii) Recovery by sale of goods under the control of proper officer

[Section 79(1)(b) read with rule 144]
 The proper officer may recover or may require any other
specified officer to recover the amount so payable from a
defaulter by detaining and selling any goods [through a process
of auction, including e-auction] belonging to such person which
are under the control of the proper officer or such other
specified officer.
 The proper officer shall prepare an inventory and estimate the
market value of such goods and proceed to sell only so much of
the goods as may be required for recovering the amount
payable along with the administrative expenditure incurred on
the recovery process.
  Where the defaulter pays the amount under recovery, including
any expenses incurred on the process of recovery, before the
issue of the notice for auction, the proper officer shall cancel the
process of auction and release the goods.
(iii) Garnishee proceedings - Recovery from a third person [Section
79(1)(c) read with rule 145]
 The proper officer may, by a notice in prescribed form, in
writing, require any other person:
 from whom money is due/may become due to such person or
 who holds/may subsequently hold money for/on account
of such person to pay to the Government
 either forthwith upon the money becoming due or being
held, or
 within the time specified 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 that amount.
 Every person to whom the notice is issued hereunder shall be
bound to comply with such notice.
 Where any 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
before payment is made, notwithstanding any rule, practice or
requirement to the contrary.
 In case the person to whom notice is issued hereunder, fails to
make the payment in pursuance thereof to the Government, 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
the rules made thereunder shall follow.
 The officer issuing such notice may, at any time, amend or
revoke the notice or extend the time for making any payment in
pursuance of the notice.

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  Any person making any payment in compliance with the notice
issued hereunder shall be deemed to have made the payment
under the authority of the person in default.
 Further, such payment being credited to the 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 him of the notice shall be personally liable to the
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.
 Where a person on whom a notice is served hereunder proves to
the satisfaction of the officer issuing the notice that:
 the money demanded/any part thereof was not due to the
person in default or
 he did not hold any money for/on account of the person in
default, at the time the notice was served on him, nor is
the money demanded or any part thereof, likely to become
due to the said person/be held for/on account of such
person,
nothing contained in this section shall be deemed to require the
person on whom the notice has been served to pay to the
Government any such money or part thereof.
 Where the third person makes the payment of the amount
specified in the notice, the proper officer shall issue a certificate
in prescribed form to the third person clearly indicating the
details of the liability so discharged.
(iv) Recovery by sale of movable/immovable property [Section
79(1)(d) read with rules 147, 148, 149, 150 and 154]
 The proper officer may, in accordance with the rules to be made
in this behalf, distrain any movable or immovable property
belonging to or under the control of such person, and detain the
same until the amount payable is paid; and in case, any part of
the said amount payable or of the cost of the distress or keeping
 of the property, remains unpaid for a period of 30 days next
after any such distress, may cause the said property to be sold
[through auction including e-auction] and with the proceeds of
such sale, may satisfy the amount payable and the costs
including cost of sale remaining unpaid and shall render the
surplus amount, if any, to such person [Section 79(1)(d)].
 The proper officer shall prepare a list of movable and immovable
property belonging to the defaulter, estimate their value as per
the prevalent market price and issue an order of attachment or
distraint and a notice for sale prohibiting any transaction with
regard to such movable and immovable property as may be
required for the recovery of the amount due.

In case of
attachment/distraint of

an immovable property order shall be affixed on the

property till the
confirmation of sale

a movable property proper officer shall seize

the property and take its
custody.

 Stamp duty/any other tax/fee payable on transfer of such

property shall be paid by the transferee to the Government.
 Any property in a debt not secured by a negotiable instrument, a
share in a corporation, or other movable property not in the
possession of the defaulter except for property deposited in/in
the custody of any Court shall be attached in the manner
provided in rule 151 [discussed subsequently in this chapter].
 Where any claim is preferred/any objection is raised with regard
to the attachment/distraint of any property by a person claiming
that he had some interest in/was in possession of, the property
in question, proper officer shall investigate the same and
postpone the sale till such time.

© The Institute of Chartered Accountants of India

 If proper officer finds merit in his claims/objection upon
investigation, proper officer will release the property, wholly or
partly. Otherwise, the proper officer will reject the claim and
proceed with the process of sale through auction.
 Where the defaulter pays the amount under recovery, including
any expenses incurred on the process of recovery, before the
issue of the notice for auction, the proper officer shall cancel the
process of auction and release the goods.
 The amounts so realised from the sale of goods, movable or
immovable property, for the recovery of dues from a defaulter
shall,:-
(a) first, be appropriated against the administrative cost of the
recovery process;
(b) next, be appropriated against the amount to be recovered;
(c) next, be appropriated against any other amount due from
the defaulter under the CGST Act or the IGST Act or the
UTGST Act or any of the SGST Act and the rules made
thereunder; and
(d) any balance, be paid to the defaulter.
 Where the property to be sold is a negotiable instrument or a
share in a corporation, the proper officer may, instead of selling
it by public auction, sell such instrument or a share through a
broker and the said broker shall deposit to the Government so
much of the proceeds of such sale, reduced by his commission,
as may be required for the discharge of the amount under
recovery and pay the amount remaining, if any, to the owner of
such instrument or a share.
 Any officer/other person who has a duty to perform in
connection with such sale will not acquire any interest in
property sold.
 No such sale will take place on Sundays/other general holidays
recognized by Government.
 Proper officer may seek assistance from jurisdictional police
station.
 (v) Recovery as arrears of land revenue [Section 79(1)(e) read with
rule 155]
 The proper officer may prepare a certificate in prescribed form
signed by him specifying the amount due from such person and
send it to the Collector of the district in which such person owns
any property or resides or carries on his business or to any
officer authorised by the Government and the said Collector or
the said officer, on receipt of such certificate, shall proceed to
recover from such person the amount specified thereunder as if
it were an arrear of land revenue.
(vi) Recovery as fine imposed by Magistrate [Section 79(1)(f) read
with rule 156]
Notwithstanding anything contained in the Code of Criminal
Procedure, 1973, the proper officer may file an application to the
appropriate Magistrate in prescribed form to recover from the person
concerned the amount specified thereunder and such Magistrate shall
proceed to recover from such person amount specified thereunder as
if it were a fine imposed by him.
(vii) Recovery through execution of a decree, etc. [Rule 146]
Where any amount is payable to the defaulter in the execution of a
decree of a Civil Court for the payment of money or for sale in the
enforcement of a mortgage or charge, the proper officer shall send a
request to the said court and the court shall, subject to the provisions
of the Code of Civil Procedure, 1908, execute the attached decree, and
credit the net proceeds for settlement of the amount recoverable.
(viii) Recovery through surety [Rule 157]
Where any person has become surety for the amount due by the
defaulter, he may be proceeded against under this Chapter as if he
were the defaulter.
(ix) Recovery from company in liquidation [Rule 160]
Where the company is under liquidation as specified in section 88, the
Commissioner shall notify the liquidator for the recovery of any
amount representing tax, interest, penalty or any other amount due
under the Act in prescribed form.

© The Institute of Chartered Accountants of India

Other provisions governing recovery of tax [Section 79(2), (3) & (4)]
 Where the terms of any bond or other instrument executed under this Act
or any rules or regulations made thereunder provide that any amount due
under such instrument may be recovered in the manner laid down in sub-
section (1), the amount may, without prejudice to any other mode of
recovery, be recovered in accordance with the provisions of that sub-section
[Section 79(2)].
 Where any amount of tax, interest or penalty is payable by a person to the
Government under any of the provisions of this Act or the rules made
thereunder and which remains unpaid, the proper officer of State tax or
Union territory tax, during the course of recovery of said tax arrears, may
recover the amount from the said person as if it were an arrear of State tax
or Union territory tax and credit the amount so recovered to the account of
the Government [Section 79(3)].
 Where the amount recovered under sub-section (3) is less than the amount
due to the Central Government and State Government, the amount to be
credited to the account of the respective Governments shall be in
proportion to the amount due to each such Government [Section 79(4)].

8. PAYMENT OF TAX AND OTHER AMOUNT IN

INSTALMENTS [SECTION 80]
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.
If there is default in payment of any one instalment then the whole outstanding
balance shall become due and payable immediately.
Provisions of section 80 read alongwith rule 158 of the CGST Rules, 2017 have
been explained in detail as under:
 DEMANDS AND RECOVERY 19.25

 A taxable person, seeking extension of time for the payment of taxes or any
amount due under the Act or for allowing payment of such taxes or amount
in instalments, shall furnish an application for the same in prescribed form.
 Commissioner shall call for a report from the jurisdictional officer about the
financial ability of the taxable person to pay the said amount.
 Commissioner may, upon consideration of the same, for reasons to be
recorded in writing, extend the time for payment or allow payment of any
amount due under this Act, other than the amount due as per the liability
self-assessed in any return, by such person in monthly instalments not
exceeding 24, subject to payment of interest under section 50 and subject
to such conditions and limitations as may be prescribed.
 However, where there is default in payment of any one instalment 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.
 Facility of payment in instalments not allowed in certain cases: The
facility of payment in instalments shall not be allowed where -
(a) the taxable person has already defaulted on the payment of any
amount under the CGST Act or IGST Act or UTGST Act or any of the
SGST Act, for which the recovery process is on;
(b) the taxable person has not been allowed to make payment in
instalments in the preceding financial year under the Act or the IGST
Act or UTGST Act or any of the SGST Act;
(c) the amount for which instalment facility is sought is less than ` 25,000.