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CA Final · Indirect Tax Laws · Demands and Recovery

Kaveri Textiles was served a notice of demand for Rs 8,00,000 and filed an appeal. The appellate authority enhanced the dues to Rs 9,50,000. The Commissioner had already begun recovery proceedings on the original demand. What is the correct position under section 84?

The Commissioner must serve another notice of demand for the enhanced Rs 1,50,000, while recovery of the original Rs 8,00,000 may continue from the stage it had reached before the appeal was decided, without any fresh notice for that portion, as section 84(a) provides.

  1. AAll earlier recovery proceedings lapse and fresh proceedings must start for the full Rs 9,50,000
  2. BA fresh notice of demand is served for the enhanced Rs 1,50,000, and recovery on the original demand may continue from the stage it had reached before disposal of the appealCorrect
  3. CNo further notice is needed, and recovery continues for Rs 9,50,000 on the original notice
  4. DRecovery of the original Rs 8,00,000 is stayed until the enhanced amount is paid

Explanation

Under section 84(a), where dues are enhanced, the Commissioner serves another notice of demand for the amount of enhancement (Rs 1,50,000). Recovery under the earlier notice continues from the stage reached before disposal without a fresh notice. The no-further-notice option ignores the need for a notice on the enhanced portion.

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