Recovery Of Tax

The GST has clear-cut processes for requesting overdue tax, which is accomplished through the issuance of Show Cause Notices (SCNs) and Orders. The department is authorized to begin tax collection if the outstanding tax balance is still not paid, which means that formal legal processes may be initiated.

Section 78 states that if a taxable person fails to pay the tax on any order within 90 days, a designated tax officer will attempt to reclaim the amount. The authorities may decrease the term from three months for the payment of interest on revenues; in such cases, the explanation is documented in writing.

?

-????????When Should Actions For GST Tax Collection Be Initiated?

According to the requirements of GST recovery of tax, if the amount owed by a taxable person remains outstanding after 3 months from the date of issuing the order for the demand of tax, GST recovery of tax would be launched. However, if the competent officer thinks it important in the interest of revenue, he may express reasons in writing and require the relevant taxpayer to make payment in a shorter term as well. If the demand is not paid within the stated time frame, the department will commence actions to recover the GST tax.

?

-????????The GST Tax Recovery Methods

The GST officers can recover the tax amount due by such defaulters in the below-given modes:

• Deduction of the due amount from any money the GST department owes to such person.
• Selling goods belonging to such person under the control of (detained by) GST officer
• Recovery of tax from a third person, who holds or may subsequently hold money for or on account of the defaulter
• Recovery through 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.
• Detention and selling of any movable or immovable property belonging to such person.
• ?Recovery of tax through the collector of the district, in which such person owns any property or resides or carries on his business as if it were an arrear of land revenue. The proper officer will need to prepare a certificate specifying the amount due from such a person and hand it over to the collector concerned, for this purpose
• ?Recovery of tax by way of application to the appropriate magistrate, who in turn shall proceed to recover the amount as if it were a fine imposed by him
• ??Recovery of tax via enforcing the bond or instrument executed under the Act or any rules or regulations made under the Act
• ??Tax is recovered by the competent official of the State Government or Union Territory Government, and any CGST arrears are recovered as if they were SGST / UTGST arrears. Such an amount will be recovered and credited to the Central Government's account. If the amount collected by this method is less than the amount owed, the difference will be divided between the Central Government and the State/UT Government in proportion to the amount owed to each authority.

-????????Special provisions for tax recovery under GST

Property transfers will be void if GST is due.

The GST authorities may confiscate the defaulter's property in order to reclaim any outstanding amounts. To avoid such seizure, the defaulter frequently places a charge on his property or rapidly transfers it by sale, mortgage, or exchange after the money is due. The plan is to deceive the government by failing to pay taxes. In such instances, the property transfer is null and invalid.

However, the transfer will not be considered null and invalid if:

• ?The transfer was done in exchange for fair consideration.
• The transfer was made in good faith, without the intent to commit fraud.
• ?At the time of the transfer, the taxpayer had not received any notification of pending tax obligations or procedures.
• ?Prior approval from the appropriate officer has been obtained.

?

-????????Tax – First Charge on Property

According to the GST recovery clause, any tax amount owed and any relevant penalties shall be the first charge on the defaulter's property. Except for the Insolvency and Bankruptcy Code of 2016, the clause supersedes all other legislation.

?

-????????Provisionally attaching property to protect revenue

In cases, wherein the Commissioner finds that the government revenue is at stake, under such circumstances he can provisionally attach any property of the defaulter.

This provisional attachment of property is applicable in the below-given cases:

• ?Assessment of taxpayers not filing returns
• Assessment of unregistered persons who were found liable to be registered
• Summary Assessment
• Inspection, search, seizure
• ?Demand and recovery proceedings for fraud and non-fraud cases
• The property includes a bank account.
• The provisional attachment is valid for 1 year.

Provisional attachment is simply a short-term security measure until a final verdict is rendered. It is usually done to prevent the defaulter from fleeing.

The temporary attachment places the property in the custody of the GST authorities, removing the defendant's right to transfer or dispose of it.

?

-????????Appeal and Revisions

If the taxpayer files an appeal or revision against the notice of demand, one of the following outcomes is possible in terms of the decision:

Due Amount Increased - In this scenario, the commissioner will serve another notice of demand for the differential amount. The previous notification will cover the old sum.

Due Amount is Decreased - In this scenario, the commissioner would notify the taxpayer as well as the body with whom the GST recovery is pending. In this instance, no future notices will be issued.

?

In case of any GST guidance, please feel free to contact us at [email protected] or call at 98332 29199