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CA Final · Indirect Tax Laws · Demands and Recovery

Kaveri Traders received a demand notice for Rs 4,00,000 of tax and filed an appeal. The appellate authority reduced the Government dues to Rs 2,50,000. Recovery proceedings for the original demand were already pending before another authority. Which statement is correct as per the CGST Act?

No fresh notice of demand is required when dues are reduced in appeal. The Commissioner intimates the reduction to the taxpayer and to the authority handling recovery, and recovery continues for the reduced amount of Rs 2,50,000 from the stage it had reached before the appeal was decided.

  1. AThe Commissioner must serve a fresh notice of demand for Rs 2,50,000 before recovery can continue
  2. BAll recovery proceedings lapse and must be restarted after a fresh order
  3. CThe Commissioner must intimate the reduction to the taxable person and to the authority with whom recovery is pending, and recovery continues for the reduced amount from the stage reached, without a fresh notice of demandCorrect
  4. DRecovery continues for the original Rs 4,00,000 until the appeal is finally disposed of by the highest court

Explanation

Under section 84(b), where dues are reduced in appeal, no fresh notice of demand is needed. The Commissioner gives intimation of the reduction to the person and to the appropriate authority where recovery is pending. Recovery then continues for the reduced amount from the stage at which it stood. The fresh-notice option fits the enhancement case, not reduction.

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