Skip to content

CA Final · Indirect Tax Laws · Demands and Recovery

Kaveri Textiles was served a notice of demand for ₹10,00,000 of Government dues, and recovery proceedings began on that demand. In appeal, the dues were reduced to ₹6,00,000. Which statement reflects section 84 of the CGST Act?

No fresh notice of demand is needed when dues are reduced. The Commissioner intimates the reduction to the taxpayer and the authority handling recovery, and recovery continues for the reduced amount from the stage it had reached before the appeal was decided.

  1. AThe recovery proceedings lapse and fresh proceedings must start on a new notice of demand for ₹6,00,000
  2. BThe Commissioner must serve a fresh notice of demand for ₹6,00,000 before recovery continues
  3. CThe Commissioner need not serve a fresh notice, must intimate the reduction to the taxpayer and the authority where recovery is pending, and recovery may continue for the reduced amount from the stage it had reachedCorrect
  4. DRecovery stays suspended until the taxpayer pays the reduced amount voluntarily

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 taxpayer and the appropriate authority. Recovery may continue for the reduced amount from the stage reached before disposal. The fresh-notice option is wrong because a fresh notice is needed only where dues are enhanced.

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