Demand & Recovery | Section 80 to 84 | CGST Act 2017

Simplified GST Series /Demand & Recovery/Section 80-84/CGST ACT 2017

Article analyses Section 80 – Payment of tax and other amount in instalments, Section 81– Transfer of property to be void in certain cases,  Section 82- Tax to be first charge on property, Section 83- Provisional attachment to protect revenue in certain cases and Section 84- Continuation and validation of certain recovery proceedings.

Section 80 – Payment of tax and other amount in instalments

On an application filed by a taxable person, the Commissioner may, 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 twenty four, subject to payment of interest under section 50 and subject to such conditions and limitations as may be prescribed:

Provided that 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. 

Analysis-  This section empowers the Commissioner to grant permission only to the taxable person to make payment of any amount due on instalment basis, on an application filed electronically in FORM GST DRC-20(refer Rule 158) . 

√ The Commissioner after considering the request by the taxable person (in FORM GST DRC-20) and report of the jurisdictional office, may issue an order in FORM GST DRC– 21, allowing the taxable person either extend the time or allow payment of any amount due under the Act on instalment basis. 

√ This section applies to amounts due other than the self-assessed liability shown in any return. 

√ The instalment period shall not exceed 24 months.

√ The taxable person shall also be liable to pay prescribed interest on the amount due from the first day such tax was due to be payable till the date tax is paid. 

√ If default occurs in payment of any one instalment the taxable person would be required to pay the whole outstanding balance payable on such date of default itself without further notice.

Section 81- Transfer of property to be void in certain cases- 

Where a person, after any amount has become due from him, creates a charge on or parts with the property belonging to him or in his possession by way of sale, mortgage, exchange, or any other mode of transfer whatsoever of any of his properties in favour of any other person with the intention of defrauding 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:

Provided that, such charge or transfer shall not be void if it is made for adequate consideration, in good faith 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. 

Analysis- The said provision would be applicable only when any tax has become due. 

√ The following acts done by a person, in favour of any another person, after the tax becomes due, would be void-

√  Situations- Void

1. Creates a charge on; or

2. Parts with the property

3. Belonging to him; or

4. In his possession

By way of sale, mortgage, exchange, or any other mode of transfer whatsoever of      any of his properties.

√ Situations / cases – valid Made for adequate consideration and 

• without notice of the pendency of proceeding
• Without notice of such tax or other sum payable by the said person,
• With previous permission of the proper officer.
• The transfer will be void, when it is or was with an intention of defrauding the Government revenue

Section 82- Tax to be first charge on property

Notwithstanding anything to the contrary contained in any law for the time being in force save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, 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 Government shall be a first charge on the property of such taxable person or such person. 

Analysis- The provisions of this section would apply to a taxable person or any other person who is liable to pay tax, interest or penalty to Government. 

• Any liability to be paid to the Government would be given priority in the matter of effecting recovery by placing a first charge on the property of the taxable person or anyother person.
• This provision also covers any other person since there are other provisions in the Act, which provide for creating a liability or recovery from a person other than the taxable person like a legal representative, member of partitioned HUF etc

Section 83- Provisional attachment to protect revenue in certain cases

(1) Where during the pendency of any proceedings under section 62 or section 63    or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue,   it is necessary so to do, he may, by order in writing attach provisionally any         property, including bank account, belonging to the taxable person in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of   a period of one year from the date of the order made under sub-section (1).

Analysis- This section confers power to provisionally attach the property of the  taxable person in certain situations to protect the interest of the Government. 

1. The provisional attachment of property of taxable person shall be executed by the Commissioner.

 2. This section applies only during the pendency of any proceedings under Section 62 ( Assessment of non filers of return) , Section 63 ( Assessment of non-filers of return), Section 64 (Summary Assessment in certain cases ) ,Section 67 (Power of inspection, search and seizure) ,Section 73 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of other than fraud or any wilful misstatement or suppression of facts ,Section 74 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason fraud or any wilful misstatement or suppression of facts) 

3. The only condition is that the Commissioner should be of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary to provisionally attach the property. The Commissioner may also seize bank accounts of such persons, if it is in the interest of revenue.

4. Any person whose property is attached may, within 7 days of the attachment may file an objection to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order. 

Section 84- Continuation and validation of certain recovery proceedings– 

Where any notice of demand in respect of any tax, penalty, interest or any other amount payable under this Act, (hereafter in this section referred to as “Government dues”), is served upon any taxable person or any other person and any appeal or revision application is filed or any other proceedings is initiated in respect of such Government dues, then–– 

(a) where such Government dues are enhanced in such appeal, revision or other proceedings, the Commissioner shall serve upon the taxable person or any other person another notice of demand in respect of the amount by which such Government dues are enhanced and any recovery proceedings in relation to such Government dues as are covered by the notice of demand served upon him before the disposal of such appeal, revision or other proceedings may, without the service of any fresh notice of demand, be continued from the stage at which such proceedings stood immediately before such disposal; 

(b) where such Government dues are reduced in such appeal, revision or in other proceedings–

(i) it shall not be necessary for the Commissioner to serve upon the taxable person a fresh notice of demand; 

(ii) the Commissioner shall give intimation of such reduction to him and to the appropriate authority with whom recovery proceedings is pending; 

(iii) any recovery proceedings initiated on the basis of the demand served upon him prior to the disposal of such appeal, revision or other proceedings may be continued in relation to the amount so reduced from the stage at which such proceedings stood immediately before such disposal. 

Analysis-  The section refers to –

I. any notice of demand in respect of Government dues (tax, interest or any other amount payable ) served on taxable person or any other person; and

–  any appeal, revision application is filed or other proceedings are initiated in respect of such Government dues.

Further–(a) such Government dues may be enhanced; or

(b) reduced in such appeal, revision or in other proceedings

II. In such cases, the Commissioner shall –

– Serve another notice on the taxable person or any other person, in respect of  the enhanced amount.

 If notice of demand is already served on taxable person or any other person before such appeal, revision or any other proceedings, then recovery of enhanced amount would be continued from the stage at which the initial proceedings stood. There is no need to issue a fresh notice of demand to the extent already covered by earlier notice.

– In case the Government dues are reduced in such appeal, revision or in other

– proceedings – the Commissioner

– Is not required to serve fresh notice of demand upon the taxable person;

– Shall intimate such reduction to taxable person and also to appropriate authority with whom recovery proceedings are pending;

Any recovery proceedings initiated prior to the disposal of such appeal, revision application or other proceeding may be continued in relation to the amount so reduce from the stage at which such proceedings stood immediately before such disposal.

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