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CA Final · Indirect Tax Laws · Demands and Recovery

Kaveri Textiles was served a notice of demand of Rs 8,00,000 and filed an appeal. The appellate proceedings enhanced the Government dues by Rs 2,00,000 to Rs 10,00,000. Recovery proceedings on the original Rs 8,00,000 were already under way. Which course follows under section 84 of the CGST Act, 2017?

A fresh notice of demand is served only for the enhanced Rs 2,00,000. Recovery on the original Rs 8,00,000 continues from the stage it had reached, without any fresh notice, because section 84(a) preserves the earlier recovery proceedings.

  1. AA fresh notice of demand is served only for the additional Rs 2,00,000, and recovery on the original demand continues from the stage reached without a fresh noticeCorrect
  2. BA fresh notice for the entire Rs 10,00,000 is served and the earlier recovery proceedings lapse
  3. CNo further notice is needed for the Rs 2,00,000 as the appellate order itself is the demand
  4. DRecovery on the original Rs 8,00,000 must restart from the beginning after a fresh notice

Explanation

Under section 84(a), where dues are enhanced the Commissioner serves another notice for the enhanced amount only. Recovery on the earlier notice continues from the stage at which it stood, without a fresh notice. The option of a fresh notice for the entire amount with lapse of proceedings is wrong because the section expressly preserves the earlier proceedings.

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