Indirect Tax Laws · Demands and Recovery

Recovery of Tax and Other Dues under GST (Sections 79 and 80 CGST)

Updated 5 October 2026 · Fact-checked

Under Section 79 CGST, if tax dues stay unpaid, the proper officer recovers them by deduction from money owed, detaining and selling goods, collecting from a third person holding the defaulter's money, attaching property, or going through a Magistrate or Collector. Section 80 allows instalments up to 24 months. Match the facts to the right mode.

Understand Recovery of Tax and Other Dues

Recovery is the last stage of the demand cycle. First a demand is raised and an order is passed. Then the person gets time to pay. If the amount stays unpaid, the department moves to recovery.

Section 78 gives the starting rule. An amount payable under an order must be paid within three months from the date the order is served, failing which recovery proceedings are initiated. The proper officer may, after recording reasons in writing, require payment forthwith if he believes that delay would adversely affect recovery. This is a power to direct payment. It is not a condition for starting recovery.

Section 79 then lists the modes of recovery. The proper officer may use one or more of them. In plain words, they are:

Deduction from any money owed to the defaulter that is in the control of the proper officer or another specified officer.
Detention and sale of goods or chattels (including digitally stored data) belonging to the defaulter that are under the control of the proper officer or another specified officer.
Recovery from a third person: the officer can require a person who owes money to the defaulter, or who holds money on the defaulter's account, to pay it to the Government, up to the amount due.
Attachment and sale of the defaulter's movable or immovable property, following the prescribed procedure.
Magistrate route: asking the appropriate Magistrate to recover the amount as if it were a fine imposed by him.
Collector route: sending a certificate to the Collector of the district to recover the amount as arrears of land revenue.

The third-person mode is the one students forget. A bank, a customer or a debtor who holds the defaulter's money can be told to pay the Government directly. The payer is treated as having paid the defaulter to that extent, so he is protected.

Section 80 is the relief valve. A taxable person can apply to the Commissioner, who may, for reasons to be recorded in writing, extend the time for payment or allow monthly instalments not exceeding 24. The facility covers amounts due under the Act, but it does not extend to an amount due as per the liability the person has already disclosed in his return. The procedure for the application and the conditions and limitations are in Rule 158. Interest is payable. If any one instalment is missed, the whole outstanding balance becomes due at once and can be recovered without a further notice.

Key rules to remember

Time to pay before recovery (Section 78): Payment due within 3 months from the date of service of the order; If the amount is not paid within this period, recovery proceedings are initiated. The proper officer may, after recording reasons in writing, require payment forthwith if he believes delay would adversely affect recovery.
Modes of recovery (Section 79): Deduction | Detain and sell goods | Third-person notice | Attach and sell property | Magistrate | Collector (land revenue arrears); The officer may use one or more modes. Remember the six by this order.
Third-person recovery: Amount payable by third person = lower of (money due or held for defaulter) and (amount of dues); The third person pays the Government up to the dues amount, either at once or when the money becomes due or is held.
Instalment facility (Section 80): Monthly instalments ≤ 24, on application to the Commissioner, reasons to be recorded in writing; Interest is payable. Subject to the conditions and limitations prescribed in the rules. The application procedure is in Rule 158. Not available for an amount due as per the liability disclosed in the return.
Default in an instalment: 1 instalment missed ⇒ entire outstanding balance due forthwith, without further notice; This is the key condition tested in case questions.

How to solve Recovery of Tax and Other Dues questions

Use this method for any question on recovery of GST dues, whether it asks for modes, a third person, or instalments.

1Identify the amount payable and the order or notice under which it is payable. Note the date of service of the order.
2Check the time: has the three-month period under Section 78 expired? Look for facts showing the officer directed payment forthwith with recorded reasons.
3Find who holds what. Is there money owed to the defaulter (refund, deposit), goods in the officer's control, a debtor or bank holding his money, or property?
4Match each fact to a Section 79 mode: deduction, detention and sale of goods, third-person notice, attachment and sale of property, Magistrate, or Collector.
5If the facts mention a request for time or monthly payments, apply Section 80: application to the Commissioner, up to 24 instalments, interest, default consequence. Check that the amount is not one already disclosed as liability in the return.
6Apply the quantity limits: a third person pays only up to the dues, and instalments cannot exceed 24.
7Write the answer in provision, facts, conclusion form, and state clearly which mode the officer may use.

Quickest way: Fact-to-mode matching

When to use it: Use for case-scenario MCQs and short written answers where the facts point to one mode.

Underline the key noun in the facts: money owed, goods, debtor or bank, property, or request for time.
Money owed to the defaulter in the officer's control: deduction.
Goods or digital data with the officer: detain and sell.
Someone else holds or owes the defaulter money: third-person notice.
Request for monthly payment: Section 80, max 24, default of one makes all due. Not for liability disclosed in the return.
Before concluding, check whether three months from service have passed.

Common mistakes in Recovery of Tax and Other Dues

Starting recovery on the day the order is passed.
Students forget the payment window before recovery.
Fix: Remember Section 78: the amount is payable within three months from service of the order. Unless the officer has recorded reasons and required payment forthwith, treat that period as running.
Saying the third person must pay the full amount he holds.
The rule is read loosely.
Fix: He pays only so much as is sufficient to meet the dues, or the whole if it is less than the dues.
Allowing more than 24 instalments or quarterly payments.
Mixing up GST with other laws.
Fix: Section 80 says monthly instalments not exceeding 24.
Thinking the officer must give a fresh notice after an instalment default.
Students assume natural justice requires a new notice.
Fix: On default of any one instalment, the whole balance becomes due and recoverable without further notice.
Forgetting interest on instalments.
Instalments are seen as pure relief.
Fix: State that interest is payable and the facility is subject to the prescribed conditions.
Granting Section 80 instalments for tax already disclosed as liability in the return.
Students treat Section 80 as open to every amount of dues.
Fix: State that the facility does not cover an amount due as per the liability disclosed in the return, and that the application goes to the Commissioner as per Rule 158.
Treating the modes as a fixed sequence where one must fail before the next.
Students read the list as steps.
Fix: The officer may proceed by one or more modes. Choose the mode that fits the facts.

Worked examples

Example 1

An order against Ankit Traders for ₹8,40,000 was served on 1 June. Ankit has not paid. On 20 June, the proper officer proposes to attach his property, saying recovery is overdue. The officer has not recorded any reasons about delay. Can he proceed?

Show the solution

Provision: Under Section 78, an amount payable under an order must be paid within three months from the date of service of the order.
Facts: The order was served on 1 June, so the three months run to 1 September. On 20 June only about 19 days have passed.
The officer has not recorded reasons or required payment forthwith, so the three-month payment period still applies.
Conclusion: Recovery proceedings on 20 June are premature.

Answer: No. The amount is payable within three months from service of the order, so recovery on 20 June is premature. The officer could have required payment forthwith only by recording reasons that delay would adversely affect recovery.

Example 2

Meera Exports has unpaid GST dues of ₹4,80,000 under a final order. The Commissioner allows her to pay in 24 equal monthly instalments on her application. She pays 4 instalments and misses the fifth. What is the position, ignoring interest?

Show the solution

Instalment amount = ₹4,80,000 ÷ 24 = ₹20,000.
Paid so far: 4 × ₹20,000 = ₹80,000.
Outstanding balance = ₹4,80,000 − ₹80,000 = ₹4,00,000 (that is 20 remaining instalments).
Provision: Under Section 80, default in any one instalment makes the whole outstanding balance due and payable forthwith, without further notice.
Conclusion: The full ₹4,00,000 becomes due, and the proper officer can recover it using Section 79 modes, such as a third-person notice to her bank or a customer.

Answer: ₹4,00,000 becomes due immediately, without further notice, and is recoverable under Section 79 (interest is also payable).

Exam tips

Write the section numbers 78, 79 and 80 in your answer. They are safe and score marks.
In case MCQs, look for one trigger word (bank, debtor, goods, property, instalments) that points to the mode.
For third-person questions, state the cap: payment only up to the dues.
For Section 80 answers, always cover: application to the Commissioner as per Rule 158, reasons to be recorded in writing, 24 months maximum, interest and the default consequence. Add that the facility does not cover liability already disclosed in the return.
Link recovery with provisional attachment and first charge topics, because case questions often combine them.

Practice questions from Demands and Recovery

Recovery of Tax and Other Dues in other exams

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

CS ProfessionalRecovery Officer and Modes of Recovery

Recovery of Tax and Other Dues: frequently asked questions

What are the modes of recovery under Section 79 CGST?

The proper officer may deduct from money owed to the defaulter, detain and sell goods, require a third person holding or owing the defaulter's money to pay, attach and sell property, or use a Magistrate or the Collector of the district. He may use one or more modes.

Can GST dues be paid in instalments?

Yes, in many cases. Under Section 80, a taxable person can apply to the Commissioner, and the procedure is in Rule 158. For reasons to be recorded in writing, the Commissioner may extend time or allow up to 24 monthly instalments, subject to prescribed conditions and interest. The facility does not cover an amount due as per the liability disclosed in the return.

What happens if I miss one instalment under Section 80?

The whole outstanding balance becomes due and payable at once. It can be recovered without any further notice to you.

Can the department recover GST from my customer or bank?

Yes. Under the third-person mode of Section 79, the officer can require a person who owes you money or holds money on your account to pay the Government. The payment is limited to the amount of the dues.