Indirect Tax Laws · Charge of GST

Tax as First Charge on Property under Section 82 of the CGST Act

Updated 5 October 2026 · Fact-checked

Under section 82 of the CGST Act, any amount payable by a taxable person or any other person to the Government under the Act is a first charge on that person's property. It applies notwithstanding any law in force, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016. To solve a question, identify the dues, the person and the property, check whether the IBC applies, then apply the priority.

Understand Tax as First Charge on Property

When a person owes GST, the Government is one of many creditors. Banks, suppliers and employees may also want to be paid from the same assets. The law needs a rule on who gets paid first. Section 82 gives that rule for GST.

The rule says that, 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 to the Government under the CGST Act is a first charge on the property of that taxable person or other person. A charge is a legal claim on property that secures the payment of a debt. A first charge means the GST dues have statutory priority over other dues on the same property.

The word to notice is "property". It covers the property of the person who owes the amount, such as stock, plant, land or bank balances. The charge secures the amount payable under the Act, which can be tax, interest or penalty that has become payable. It is not a claim on the property of an unrelated third party.

The provision starts with a non-obstante clause. That is why, outside insolvency proceedings, the Government's claim has statutory priority as a first charge, even where a bank or another creditor has a claim on the same assets. Conflicts between section 82 and other statutes, such as SARFAESI, have been litigated. So rest your answer on the section's non-obstante wording and do not present the outcome as beyond dispute.

There is one exception the section itself names: the Insolvency and Bankruptcy Code, 2016. Where the person is in insolvency or liquidation under the IBC, the IBC priority governs, not the section 82 first charge. For example, in liquidation, Central and State Government dues rank lower in the section 53 waterfall than insolvency resolution costs, workmen's dues and secured creditors. The IBC order applies, not section 82. Do not go beyond this in your answer unless the facts give you more.

In exam answers, say that the provision operates despite other laws, save as provided in the IBC, and that the Government's claim is a priority claim on the defaulter's own property.

This section works together with the recovery provisions, the provisional attachment power and the liability rules on transfer of business. Section 82 gives the priority. The other provisions give the Department the tools to actually collect the money. Keep these roles separate in your answer.

Key rules to remember

Rule of section 82: Amount payable to Government under CGST Act by a taxable person (or any other person) = first charge on that person's property; State it as a priority claim on the property of the person who owes the amount.
Override clause: Applies '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'; Use this phrase to explain why GST dues have statutory priority over other creditors' claims, and remember the IBC carve-out. Conflicts with other statutes, such as SARFAESI, have been litigated, so rest the answer on this wording.
IBC exception: Insolvency or liquidation under the IBC, 2016 = IBC priority governs, not the section 82 first charge; In liquidation, Government dues rank lower in the section 53 waterfall than insolvency resolution costs, workmen's dues and secured creditors. The IBC order governs, not section 82.
Nature of dues covered: Tax + interest + penalty payable under the Act; Only amounts actually payable under the Act are secured. Say so explicitly.

How to solve Tax as First Charge on Property questions

Use this method for any case question on first charge, priority of GST dues or competing creditors.

1Identify who owes the amount and confirm it is payable to the Government under the CGST Act.
2List the dues involved: tax, interest, penalty. Note whether they are actually payable.
3Identify the property in question and confirm it belongs to the person who owes the amount.
4Check whether the Insolvency and Bankruptcy Code, 2016 applies, that is, whether the person is in insolvency or liquidation. If yes, the IBC priority governs.
5If the IBC does not apply, state section 82: the dues are a first charge on that property, notwithstanding any law in force.
6Apply it to the competing claim, such as a bank, supplier or other creditor, and say GST dues rank first outside insolvency proceedings.
7Link to the recovery route if the question asks how the Department collects, such as attachment or recovery proceedings.
8Conclude in one line: provision, facts, conclusion.

Quickest way: Four-line priority answer

When to use it: Use when a short-answer or MCQ asks whether GST dues or another creditor ranks first.

Check: is the amount payable to the Government under the CGST Act, by this person?
Check: is the asset the property of that same person?
Check: is the person under the IBC (insolvency or liquidation)? If yes, the IBC priority governs.
If the first two are yes and the IBC does not apply, answer: first charge under section 82, so GST dues rank ahead of other creditors.

Common mistakes in Tax as First Charge on Property

Saying the charge applies only to the registered person's immovable property.
Students link 'charge' with land and buildings.
Fix: Write 'property' generally. It is not limited to immovable property.
Treating the charge as applying to anyone's property connected with the transaction.
Students confuse it with liability of other persons.
Fix: The charge is on the property of the person who owes the amount. Other persons' liability comes from separate sections.
Forgetting the non-obstante clause.
Students memorise the headline only.
Fix: Always add 'notwithstanding anything contrary in any law for the time being in force, save as provided in the IBC, 2016' to explain the priority.
Saying GST dues always rank first, ignoring the IBC.
Students treat the non-obstante clause as absolute.
Fix: Section 82 is save as otherwise provided in the IBC. In insolvency or liquidation, the IBC priority scheme governs.
Treating section 82 as the recovery procedure.
Priority and collection are mixed up.
Fix: Section 82 gives priority. Recovery and attachment provisions give the method of collection.
Including amounts not yet payable, such as an unconfirmed demand.
Students assume any notice creates a charge.
Fix: Refer to the amount 'payable' under the Act and state the assumption if facts are unclear.

Worked examples

Example 1

Alpha Traders Ltd. has not paid GST of ₹8,00,000 and interest on it. It has also borrowed from a bank against its stock. No insolvency proceedings have been started against it. The bank claims it must be paid first from the sale of the stock. Advise the Department.

Show the solution

Provision: under section 82 of the CGST Act, any amount payable by a taxable person to the Government under the Act is a first charge on that person's property, notwithstanding any law in force, save as otherwise provided in the IBC, 2016.
Facts: the GST and interest are payable by Alpha Traders Ltd. The stock is its own property. The IBC does not apply, as no insolvency or liquidation proceedings exist.
Application: the Government's claim operates as a first charge on the stock, and the section applies despite the bank's claim.
Conclusion: outside insolvency proceedings, the Department's dues have statutory priority as a first charge under section 82. Conflicts with other statutes, such as SARFAESI, have been litigated, so the Department's position rests on the section's non-obstante wording.
Caution: if Alpha Traders were in insolvency or liquidation under the IBC, the IBC order would govern instead. In liquidation, Government dues rank lower in the section 53 waterfall than secured creditors, among others.

Answer: Outside insolvency proceedings, the GST tax and interest payable are a first charge on Alpha Traders' stock under section 82, so they have statutory priority, resting on the section's non-obstante wording. If the IBC applied, its priority scheme would govern instead.

Example 2

Ravi, a registered person, owes tax and penalty under the CGST Act. His friend Suresh, who has no dealings with Ravi's business, owns a flat. The Department proposes to treat Suresh's flat as charged for Ravi's dues. Is this correct?

Show the solution

Provision: section 82 creates a first charge on the property of the person who owes the amount to the Government.
Facts: the dues are Ravi's. The flat belongs to Suresh, who is not liable under any provision on the facts given.
Application: the charge attaches to Ravi's property, not to that of an unrelated person.
Conclusion: the proposal is not supported by section 82.

Answer: No. Section 82 charges the property of the person who owes the amount, so Suresh's flat is not covered on these facts.

Exam tips

Write the provision first, then facts, then conclusion. Examiners reward this order.
Quote the words 'first charge' and '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' in your answer.
Before saying GST dues rank first, check whether the IBC (insolvency or liquidation) applies. If it does, the IBC priority governs.
Always say whose property is charged: the person who owes the amount.
In MCQs, watch for options that extend the charge to third parties, limit it to immovable property, or ignore the IBC.
Keep the answer short. This is a one-section topic and usually carries few marks inside a larger recovery or liability question.

Practice questions from Charge of GST

Tax as First Charge on Property in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Tax as First Charge on Property: frequently asked questions

What does first charge on property mean under section 82?

It means the GST dues payable to the Government are a priority claim on the property of the person who owes them. They have statutory priority over other claims on that property, notwithstanding any law in force, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016.

Does section 82 apply only to registered persons?

It applies to a taxable person or any other person who owes an amount to the Government under the CGST Act. Check that the amount is payable under the Act.

Is section 82 the same as provisional attachment?

No. Section 82 gives priority to GST dues. Provisional attachment is a separate power used to protect revenue during proceedings.

Does a bank's security override GST dues?

Outside insolvency proceedings, GST dues have statutory priority as a first charge under section 82. Conflicts with other statutes, such as SARFAESI, have been litigated, so base your answer on the section's non-obstante wording. Caution: section 82 is save as otherwise provided in the IBC, 2016. In insolvency or liquidation, the IBC order governs. In liquidation, Government dues rank lower in the section 53 waterfall than insolvency resolution costs, workmen's dues and secured creditors.