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CA Final · Indirect Tax Laws · Demands and Recovery

Kaveri Textiles received a notice of demand for Rs 8,00,000 as tax, and filed an appeal. The appellate authority reduced the Government dues to Rs 5,00,000. Recovery proceedings on the original demand were already pending with the recovery authority. Under section 84, which statement is correct?

No fresh notice of demand is required when dues are reduced. The Commissioner intimates the reduction to the taxable person and the authority handling recovery, and recovery proceedings continue for the reduced amount of Rs 5,00,000 from the stage they had reached before the appeal was disposed of.

  1. AThe Commissioner must serve a fresh notice of demand for Rs 5,00,000 and the earlier recovery proceedings lapse
  2. BThe Commissioner need not serve a fresh notice, must intimate the reduction to the taxable person and the authority with whom recovery is pending, and recovery may continue for the reduced amount from the stage it had reachedCorrect
  3. CRecovery proceedings must restart from the beginning for Rs 5,00,000 after a fresh notice
  4. DThe earlier recovery proceedings are quashed and cannot continue for any amount

Explanation

Under section 84(b), where dues are reduced in appeal, no fresh notice of demand is needed. The Commissioner intimates the reduction to the taxable person and the appropriate authority, and recovery proceedings may continue for the reduced amount from the stage immediately before disposal. The option requiring a fresh notice describes the enhancement situation instead.

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