Skip to content

CA Final · Indirect Tax Laws · Demands and Recovery

An Input Service Distributor of Arjun Group distributed credit in contravention of section 20, so that Ruchi Ltd, one of the recipients, received excess credit of Rs 90,000. How is the excess credit recovered under section 21 of the CGST Act, 2017?

The excess credit of Rs 90,000 is recovered from the recipient, Ruchi Ltd, along with interest. The amount is determined by applying section 73 or section 74 or section 74A, as the case may be, mutatis mutandis, as provided in section 21.

  1. AFrom the recipient, Ruchi Ltd, with interest, applying section 73 or 74 or 74A, as the case may be, mutatis mutandis to determine the amountCorrect
  2. BOnly from the Input Service Distributor, with no recovery from the recipient
  3. CFrom the recipient without interest, by simple adjustment in the electronic credit ledger
  4. DFrom the recipient only through a civil suit outside the Act

Explanation

Section 21 provides that the excess credit is recovered from the recipients along with interest. The provisions of section 73 or 74 or 74A apply mutatis mutandis to determine the amount. Recovery solely from the distributor, or without interest, contradicts the section.

Did you get it right without looking?

One question tells you little. A timed set on Demands and Recovery shows your real accuracy, how long you take and where you lose marks.

Practise Demands and RecoveryFree diagnostic mock

More Demands and Recovery questions