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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Assessment, Audit, Scrutiny, Demand and Recovery, Advance Ruling, Appeals and Revision

A demand notice of ₹80 lakh was served on Meru Steels Ltd. In appeal, the dues were reduced to ₹50 lakh, while recovery proceedings on the original demand were pending. Under section 84 of the CGST Act, what is the correct position?

No fresh notice of demand is needed. The Commissioner intimates the reduction to the taxpayer and to the recovery authority, and recovery continues for the reduced ₹50 lakh from the stage it had reached before the appeal was disposed of, as section 84(b) provides.

  1. ARecovery proceedings lapse and must restart with a fresh notice for ₹50 lakh
  2. BThe Commissioner need not serve a fresh demand notice, must intimate the reduction, and recovery continues for ₹50 lakh from the stage it had reachedCorrect
  3. CRecovery continues for the full ₹80 lakh until a refund is claimed
  4. DRecovery is stayed automatically until the taxpayer pays ₹30 lakh

Explanation

Under section 84(b), when dues are reduced no fresh notice is needed. The Commissioner intimates the reduction to the taxable person and to the authority where recovery is pending. Recovery then continues for the reduced amount (₹50 lakh) from the stage reached. A fresh notice is required only where dues are enhanced, and only for the enhanced amount.

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