Demand and Recovery

under GST
BY :
KHUSHI
03821201719
5TH SEM
SEC –A
2ND SHIFT
 What do you mean by Demand and
Recovery under GST?
Demand under GST and the recovery provisions will be initiated if there is a failure to pay the tax in
compliance with the Goods and Services Tax (GST) laws.

When can a Demand Under GST be

Raised by the Tax Authorities?
GST is payable on a self-assessment basis. If the assesse pays the tax on self-assessment
correctly then there will not be any problem.

If there is any short payment or wrong utilisation of input tax credit, or refund is wrongly made
then the GST authorities will initiate demand and recovery provisions against the assesse.
Legal provisions of demand and Recovery under
GST !
Chapter XV comprising sections 73 to 84 lay down the procedure in demand and recovery of GST

SECTION DETAILS
SEC 73 Determination of tax not paid or short paid or erroneously refunded or
input tax credit wrongly availed or utilised for any reason other than fraud
or any wilful misstatement or suppression of facts.
SEC 74 Determination of tax not paid or short paid or erroneously refunded or
input tax credit wrongly availed or utilised by reason of fraud or any
wilful misstatement or suppression of facts.
SEC 75 General provisions relating to determination of tax.
SEC 76 Tax collected but not paid to Government.
SEC 77 Tax wrongfully collected and paid to Central Government or State
Government.
SEC 78 Initiation of recovery proceedings
SEC 79 Recovery of tax.
SEC 80 Payment of tax and other amount in instalments.

SEC 81 Transfer of property to be void in certain cases

SEC 82 Tax to be first charge on property

SEC 83 Provisional attachment to protect revenue in certain cases

SEC 84 Continuation and validation of certain recovery proceedings

 SOME TERMINOLOGY

Show Cause Notice

Show cause notice (SCN) – is a document served by department as an opportunity to person to explain with
reasons as to why particular course of action should not be taken against him. No person can be proved
guilty without given an opportunity of being heard.

Proper Officer
As per section 2(91) of CGST Act, proper officer, in relation to any function to be performed under
CGST Act, means the Commissioner or the officer of the central tax who is assigned that function
by the Commissioner in the Board.
GST DEMAND WHEN THERE IS NO FRAUD
(SECTION 73)

This provision applies to the following cases when for any reason other than fraud, i.e., without any
motive to evade tax:
* Tax is unpaid/short paid or,
* Refund is wrongly made or,
* The input tax credit has been wrongly availed/utilised

The proper officer (i.e., GST authorities) will serve a show-cause notice on the taxpayer. They
will be required to pay the amount due, along with interest and penalty.
 Time Limit
The proper officer is required to issue the show-cause notice 3 months before the time limit. The
maximum time limit for the order of payment is 3 years from the due date for filing of annual return for
the year to which the amount relates. There is no such compulsion that difference between time period of
SCN and order of demand is 3 months.

Voluntary Tax Payment

A person can pay tax along with interest, based on his own calculations (or the officer’s
calculations), before the notice/statement is issued and inform the officer in writing
of the same. The officer will not issue any notice in this case. However, if the officer
finds that there is a short payment, they can issue a notice for the balance amount.
Penalties
Paid all dues Penalty amount

Before notice No penalty

Within 30 days from notice No penalty

After 30 days from notice or issue of order A higher of 10% of the demanded tax or
Rs.10,000, is the penalty
 Let us understand how the penalty works in non-
fraud cases with this instance of a taxpayer who
did not deposit their tax with an example!!
Action/Consequences
Action/Consequences Period/Date
Period/Date
Tax period when he did not deposit the tax FY 2020-21
Amount relates to October 2020, i.e., FY 2020-21
Due date to file annual returns for the year to which the The last date of filing the annual return of FY 2020-21
amount relates is 31st December 2021
The
The maximum
maximum time
time limit
limit for
for an
an order
order is
is 33 years
years from
from 33 years
years from
from the
the date
date given
given above
above falls
falls on
on 31st
31st
the
the due
due date
date of
of annual
annual returns
returns December
December 2024
2024
Issue the order within three years The last date for issuing is
Issue the order within five years The last date for issuing is
31st December 2024
31st December 2024
Issue the show cause notice at least 3 months before The last date of issuing the show cause notice is 30th
Issue thelimit
the time show cause notice at least months before the The last date
September of issuing the show cause notice is 30th
2024
time limit Sep 2024
 GST Demand when there is a Fraud
(Section 74)
This section applies to cases of tax evasion involving:
 Fraud
 Willful misstatement
 Suppression of facts
This results in:
 Unpaid/short paid tax or,
 Wrong refunds or,
 Wrongly availed/utilised input tax credit

In such cases, the proper officer will serve a show-cause notice to the taxpayer. The
taxpayers will be required to pay the amount due along with interest and penalty.
Time Limit
For cases of fraud, the proper officer is required to issue the notice 6 months before
the time limit. The maximum time limit is 5 years from the due date for filing of
annual return for the year to which the amount relates. There is no such compulsion
that difference between time period of SCN and order of demand is 6 months.

Voluntary Tax
Payment
If the person pays the tax along with interest and a 15% penalty based on their own
calculations (or the officer’s calculations) before the notice/statement is issued and
informs the officer in writing, then the officer will not issue any notice. 
Penalties
Paid all dues
Before notice
Within 30 days from notice
After 30 days from the order
For other cases (Section 122)
Penalty amount
15% of the demanded tax is the penalty
25% of the demanded tax is the penalty
50% of the demanded tax is the penalty
100% of the demanded tax is the penalty
For example- Let us understand how the penalty works
in fraudulent cases with this instance of a taxpayer who
did not deposit their tax 
Action/Consequences Period/Date
Tax period when he did not deposit the tax FY 2020-21
Due date to file annual returns for the year to The last date of filing the annual return of FY
which the amount relates 2020-21 is 31st December 2021
The maximum time limit for an order is 5 years 5 years from the date given above falls on 31st
from the due date of annual returns December 2026
Issue the order within five years The last date for issuing is
31st December 2026
Issue the show cause notice at least 6 months The last date of issuing the show cause notice is
before the time limit 30th June 2026
Summary Of SEC 73 and SEC 74
Particulars When there is no fraud Comments
(Section 73) When there is a fraud
(Section 74)

Show cause notice Yes Yes —

Max. time limit 3 years 5 years Time is calculated from
the due date of filing the
annual return for the year
to which the demand
relates or date of refund.

The time limit for SCN 3 months before the 6 months before the Hence, 3 or 5 years, as the
expiry of 3 years expiry of 5 years case may be, is the
maximum time limit for
issuing the order of GST
demand payment.

Penalty 10% of tax 25% of tax —

 Section 74 of the Central Goods and
Section 73 of the Central Goods and Services Act, 2017.
Sr. No. .
Services Tax, 2017. (Case of suppression or fraud or
misstatement) 
There shall be no-issuance of notice and the
There shall be no-issuance of penalty or
Before show cause notice is taxpayer pays the due tax including the
1. notice and the taxpayer pays the due tax
issued penalty and interest @15% of the amount
including the interest which is applicable.
due on  a tax

A taxpayer is required to pay the due tax

A taxpayer is required to pay the due tax
within the period of 30 days from the issue
Aftershow cause notice is along with the interest and penalty @25
2. of show cause notice along with the interest
issued  % and payment must be within the period of
which is applicable and there shall be no
30 days of issue of show cause notice.
penalty after the payment of due tax.

A taxpayer pays tax including the penalty

A taxpayer may avoid the prosecution even
and interest @50% of the due amount of tax.
3. After an order is issued after the issuance of the order if he will pay
After the payment of due tax, the proceeding
the interest, tax or penalty on time.
shall be deemed to be completed.

A taxpayer is required to pay the due

amount of tax along with penalty and
A taxpayer is required to pay the due tax
interest equal to of @10% of the due
4. Other Cases along with the penalty and interest @100%
amount tax or Rs. 10,000 (whichever is
of the due amount of tax.
higher) within 30 days from the
communication of the decision.
neral Provisions for Determination of Tax (Section 75)
• If the service of notice or issue of the order has been stayed by a Tribunal/Court order then the stay period will be
excluded from the time limits of 3 and 5 years.
• If the Appellate Authority/Tribunal/Court decides that charges of fraud are not sustainable (i.e., it is not a fraud
case), then the notice issued earlier will be assumed to be a notice under Section 73 (i.e. non-fraud case). The tax
officer will calculate the tax accordingly.
• If the Tribunal/Court directs that an order has to be passed, then it will be issued within two years from the date
of the communication of direction.
• Opportunity of being heard given to aggrieved person
• An adjournment( for reasons in writing)= upto 3 times a person
• Amount to paid in demand order = Amount to be paid in showcause notice..
• Interest unpaid/short paid tax will have to be paid whether or not specified in the order.
• Interest = Mandatory ( even if not mentioned in SCN)
• If the order is not issued within 3 or 5 years then it is assumed that the adjudication proceedings are completed.
No order will be issued afterwards.
• If appeal is filed by dept.,against decision of Appellate Authority/Tribunal/Court = Period between date of
decision of Higher Authority and Lower Authority = excluded from period of SCN / DO.
• If any amount of self assessed tax/ amount of interest = remains unpaid = recovered u/s 79
• If penalty u/s 73/74 imposed= no other penalties.
Section 76:- Tax which is collected but not paid to
the Government
Section 76 of the Central Goods and Services Tax (CGST) Act, 2017, deals with the taxes which are
collected by a person but not paid to the Government.
If a person collects from any other person the amount of tax and has not paid it to the Government have
to pay the amount of tax to the Government irrespective of the fact that the goods or services upon which
the tax was collected are taxable or not.
If any person, who is liable to pay the tax to the Government fails to do so, then the proper officer may
serve a notice to that person asking him to show cause why he should not pay the amount as mentioned
in the notice and why he should not pay a penalty equal to the amount mentioned in the notice.
The person will pay the amount after the due amount shall be determined by the proper officer after his
representation. Following the principle of Natural Justice, the opportunity of being heard shall be
provided to the person by the proper officer on his requests in writing.
Adjudication and limitation for recovery of tax

• The order shall be issued by the public officer within one year from the date of
issuance of the notice.
• When the appellate court had put a stay on the issuance of an order by the public
office, then the limitation period shall exclude the period of stay for the purpose
of computing the time period of one year.
Section 77: Tax Which are Wrongfully Collected
and which is paid to Central or State
Government
Section 77 of Central Goods and Services Tax, 2017, deals with the taxes which are collected wrongfully and
credited in the account of the Central Government or State Government.

Payment of tax by Registered

Actual Transaction What is Refunded? If any interest?
Person

Payment of State tax and Refund of State tax and Central There shall be no interest in the
Central tax or Payment of tax or Union tax or Central Integrated Tax payment
Where an actual transaction is
Union Territory tax and Central Territory tax under Section under Section 19(2) of the
an Inter-state supply 
tax, considering the transaction 77(1) of the Central Goods and Integrated Goods and Services
to be intra-state supply Services Tax Act, 2017. Tax Act, 2017

There shall be no interest on

Refund of Integrated Tax under the Central/State Tax and
Payment of Integrated Tax,
Where an actual transaction is Section 19(1) of the Integrated Union/Central Tax
considering the transaction to
an Intra-state supply Goods and Services Tax Act, under Section 77(2) of Central
be Inter-state supply
2017 Goods and Services Tax Act,
2017.
 Section 78: How Recovery
Proceedings are Initiated
Section 78 of Central Goods and Services Tax, 2017,  talks about the consequences of not paying
the tax after the order has been made by the court.
If a notice has been issued to a person to pay tax and subsequently an order has been issued by the
court against that person to pay the tax then that person is required to pay the tax within three
months from the date when the first service of an order has been made. If that person fails to pay
the tax within three months, recovery proceedings will be started against that person.
 Section 79: Tax
Section 79 of Goods andRecovery
Services Tax Act, 2017, deals with the provisions relating to the recovery of tax when the
person fails to pay tax to the Government.

If a person does not pay the tax to the Government which he is required to pay under the Central Goods and Services
Tax Act, 2017, then it shall be recovered by the proper officer by any of the modes as prescribed:-

 Reduction of dues from amount by tax authorities to such person ( Deduction from refund payable)..
 Recovery by way of detaining / selling goods belonging to such person
 Recovery from third person for whom money is due or may become due to such person or recovery from person
who holds or subsequently hold money for such person

 Detain/ Seize any movable / immovable property belonging to such person until amt is paid unless and if dues are
not paid within 30 days then property is to be sold and amount payable will be recovered from sale proceeds.
 The proper officer may even prepare a certificate of due under his signature and send it to the collector of
the district where the property of the defaulting taxpayer lies specifying the amount due from that person
and the collector will move to collect the amount from that person as if the amount as arrears of land
revenue.
 If in case, the defaulter lives in a jurisdiction other than that of the proper officer, then the proper officer
may file an application to the Appropriate magistrate in this behalf. And that magistrate will recover the
amount specified as if the amount is imposed as fine by fine.
Section 80: Tax Payment and Payment of Other
Amount in Monthly Instalments
Payment of tax and other amount in installments
• The provisions for payment of Tax and other amounts in Installments= allowed(other than self
assessment tax)
• This benefit can be availed= by making an application to the Commissioner by specifying
reasons for such requests.
• Commissioners may allow payment in installments( Subject to maximum 24 monthly
installment + Applicable Interest )
If default in payment in any installment = whole outstanding balance payable on such date become
due and payable immediately and shall be liable for recovery.
(without any further notice being served)
Section 81: When Transfer of Property is
considered to be Void 
Transfer of property to be void in such cases:-

When a person-( after any amount has become due from him)( with the intention of
defrauding the Govt Revenue)
creates a charge on or parts with the property belonging to him or his possession”
 By way of sale/mortgage/exchange/any other mode of transfer
 Or any of his properties in favour of any other person,

Such change/ transfer= Void , as against any claim in respect of any tax/ other sum
payable by said person.
Provision- Such change/transfer = not void , if made for Adequate Consideration, in
good faith,&
- without notice of the pendency of such proceedings under this Act.
- without notice of such tax/ other sum payable.
- with previous permission from proper oficer
Section 82: Tax to be Charge on
Property
Section 82 of Central Goods and Services Tax Act, 2017, says that-
Tax to be first charged on property-
Over riding fot the time being in force (other than the Insolvency and Bankruptcy Code
2016)
 Any amount payable by a taxable person/any other person
 On account of tax/interest/penalty which is liable to pay to Govt.,
Shall be a first charge on the property, of such taxable person.
Section 83: Provisional Attachment to the
Property
Section 83 of the Central Goods and Services Tax Act, 2017, deals with the attachment of
property provisionally.
CIRCUMSTANCES:
Where during pendency of any proceedings under – Best Judgment, Assessment for non filers
of return(u/s 62)(or) for unregistered person(u/s 63)/Summary Assessment in special cases(u/s
sec 64)/Inspection , search , seizure(u/s sec 67)/SCN and DO for cases other than fraud (u/s
63)or cases of fraud(u/s 74)
PROVISIONAL ATTACHMENT: Commissioner may( by order in writing)
Attach provisionally any property + bank account of the taxable person (to protect
interest of Govt Revenue)
TIME PERIOD – Every such provisional attachment = cease to have affect , after the
expiry of one year – from date of order under subsec- 1
Section 84:- Enhancement and Reduction of
Tax in Appeal, Revision, etc.
Section 84 of Central Goods and Services Tax Act, 2017, deals with the cases where the dues
upon the Government has been 
Where any notice of demand i.e “Govt dues”= Served upon any taxable person and any
appeal/revision application is filed/any other proceedings is initiated, then
A) When such dues are enhanced:
 Commissioner shall serve another notice of demand in respect of the amount by which
dues are enhanced.
 Any recovery proceedings in respect to such dues, covered by notice before disposal such
appeal etc maybe continued from the stage at which proceedings stood immediately before
such disposal.
.
B) When such dues are reduced :

 Commissioner will not serve any new notice of demand to the taxpayer but
instead will give intimation of such reduction to him and to appropriate
authority with whom proceedings is pending.
 Any recovery proceedings initiated on basis of demand served upon him at
the disposal of such appeal etc are continued in repect to the amount so
reduced, from the stage at which proceedings stood immediately before
such disposal.
Thank you