Skip to content

CA Final · Indirect Tax Laws · Demands and Recovery

Kaveri Traders received a demand notice of Rs 8,00,000 tax. In appeal, the demand was enhanced by Rs 2,00,000 to Rs 10,00,000. Recovery action on the original Rs 8,00,000 was already under way. Under section 84 of the CGST Act, what is the correct course of action?

The Commissioner serves another notice of demand only for the enhanced Rs 2,00,000, while recovery of the original Rs 8,00,000 continues from the stage it had reached without any fresh notice, as section 84(a) provides.

  1. AServe another notice of demand for Rs 2,00,000 only, and continue recovery of the original Rs 8,00,000 from the stage reached without a fresh noticeCorrect
  2. BServe a fresh notice for the entire Rs 10,00,000 and restart recovery from the beginning
  3. CContinue recovery for Rs 8,00,000 only, as no notice can be issued for enhancement
  4. DDrop the earlier recovery and wait for the appellant to pay Rs 10,00,000 voluntarily

Explanation

Under section 84(a), where dues are enhanced, the Commissioner serves another notice of demand for the enhanced amount only (Rs 2,00,000). Recovery on the dues covered by the earlier notice continues from the stage it had reached, without a fresh notice. Restarting for the whole amount is wrong because no fresh notice is needed for the original sum.

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