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Direct and Indirect Taxation · Charge of Tax including Reverse Charge

Tax to Be First Charge on Property under Section 82 CGST

Updated 10 October 2026 · Fact-checked

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 his property. This holds notwithstanding anything in any other law, subject to what the Act says. To answer, state the rule, apply it to the dues and property, and note the limits.

Understand Tax to be First Charge on Property under Section 82

Think of a taxable person who owes GST, interest or penalty. The government is one creditor among many. Banks, suppliers and employees may also want to be paid from the same property. Section 82 gives the government priority over these other claims.

The rule says that any amount payable by a taxable person to the government under the Act is a first charge on his property. A charge means the dues are secured against the property. First means the government's claim ranks ahead of other claims on that property.

The section covers the dues under the Act: tax, interest, penalty and similar sums payable under the CGST Act. It applies to the property of the taxable person, whether movable or immovable. Treat property here in its ordinary wide sense.

The priority is not absolute. The section is subject to the provisions of the Insolvency and Bankruptcy Code, 2016. So in insolvency proceedings, the order of payment set by that Code decides, not Section 82 alone. Study the statutory text and the saving words carefully, as examiners test them.

Section 82 sits with the recovery provisions. It does not replace them. The department still has to follow the recovery procedure under the Act to actually realise the dues. The first charge only fixes priority and secures the claim.

Key rules to remember

Core rule of Section 82
Amount payable by taxable person to Government under the Act = first charge on his property
Applies to dues under the CGST Act such as tax, interest and penalty.
Override and its limit
Priority applies notwithstanding other laws, but subject to the Insolvency and Bankruptcy Code, 2016
Always mention the Code as the key exception when insolvency is in the facts.
Nature of the right
First charge = priority claim; recovery still follows the Act's procedure
The charge secures the dues. It does not by itself sell the property.

How to solve Tax to be First Charge on Property under Section 82 questions

Use this method for any theory or case question on Section 82.

  1. 1Identify the person and confirm he is a taxable person with dues payable under the Act.
  2. 2List the amount: tax, interest, penalty or other sum under the Act.
  3. 3State the rule: such amount is a first charge on his property.
  4. 4Identify the competing claims, such as a bank loan, other creditors or insolvency proceedings.
  5. 5Apply priority: the government's dues rank first, unless the facts involve the Insolvency and Bankruptcy Code, 2016.
  6. 6Mention that recovery must still follow the procedure under the Act.
  7. 7Conclude clearly in one line with the answer to what was asked.

Quickest way: Three-line answer

When to use it: For 2-mark MCQs and short theory questions.

  1. Line 1: Dues under the Act are a first charge on the taxable person's property.
  2. Line 2: The charge gives the government priority over other creditors.
  3. Line 3: It is subject to the Insolvency and Bankruptcy Code, 2016, and recovery needs the Act's procedure.

Common mistakes in Tax to be First Charge on Property under Section 82

  • Saying the government's claim always beats every other claim.

    Students remember 'first charge' and forget the saving words.

    Fix: Add that it is subject to the Insolvency and Bankruptcy Code, 2016.

  • Treating Section 82 as a recovery procedure.

    It sits near the recovery provisions, so it looks like one.

    Fix: Say it only gives priority and security. Actual recovery follows the Act's procedure.

  • Limiting the charge to tax alone.

    Students think only of GST amount.

    Fix: Write 'any amount payable under the Act', which includes interest and penalty due under the Act.

  • Applying it to the property of someone who is not the taxable person.

    Facts often mention directors, buyers or relatives.

    Fix: Check whose dues they are. The charge is on the property of the taxable person who owes the amount.

  • Quoting a wrong section number or mixing it with income-tax provisions.

    Similar priority rules exist in other laws.

    Fix: Write Section 82 of the CGST Act and keep the answer within GST.

Worked examples

Example 1

Explain in brief the provision of the CGST Act relating to tax being a first charge on property. Does it apply in insolvency proceedings?

Show the solution
  1. Cite the rule: 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 his property.
  2. Explain the meaning: the government has priority over other creditors in respect of those dues.
  3. State the limit: the section is subject to the Insolvency and Bankruptcy Code, 2016.
  4. Apply to insolvency: the order of payment is therefore determined by that Code, and Section 82 does not override it.
  5. Add that recovery still follows the procedure under the Act.

Answer: Dues under the Act are a first charge on the taxable person's property, giving the government priority. In insolvency the priority is subject to the Insolvency and Bankruptcy Code, 2016.

Example 2

Mehta Traders Pvt. Ltd., Pune, owes the government ₹4,00,000 as GST under the CGST Act. It also owes ₹6,00,000 to a supplier who has no statutory priority. No insolvency proceedings are on. The company's godown is the only property. Whose claim ranks first on the godown, and which is the larger priority amount?

Show the solution
  1. Dues of ₹4,00,000 are an amount payable to the government under the Act.
  2. By Section 82 they are a first charge on the company's property, including the godown.
  3. The supplier's ₹6,00,000 is an ordinary claim with no statutory priority.
  4. No insolvency proceedings exist, so the Code's exception does not arise.
  5. The government's claim ranks first, though it is the smaller amount. Priority depends on ranking, not size.

Answer: The government's ₹4,00,000 ranks first on the godown. The supplier's larger ₹6,00,000 ranks after it.

Exam tips

  • Write the exact words: first charge, property of the taxable person, amount payable under the Act.
  • Always add the Insolvency and Bankruptcy Code, 2016 exception when the facts show insolvency.
  • In MCQs, reject options saying the charge is absolute or applies to any person's property.
  • Link it briefly to recovery provisions in the answer, but do not confuse the two.
  • Keep the answer short. It is usually a 2-mark MCQ or a part of a longer question.

Practice questions from Charge of Tax including Reverse Charge

Tax to be First Charge on Property under Section 82 in other exams

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

Tax to be First Charge on Property under Section 82: frequently asked questions

What does first charge on property mean under GST?

It means GST dues are secured against the taxable person's property. The government's claim gets priority over other creditors, subject to the Act's saving words.

Which dues are covered by Section 82 of the CGST Act?

Any amount payable by a taxable person to the government under the Act. This includes tax, and also interest and penalty payable under the Act.

Does Section 82 override the Insolvency and Bankruptcy Code?

No. The section is subject to the Insolvency and Bankruptcy Code, 2016. In insolvency, the Code decides the order of payment.

Does a first charge mean the department can sell the property directly?

No. The charge only gives priority and security. The department must still use the recovery procedure provided in the Act.