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CA Final · Indirect Tax Laws · Demands and Recovery

Kaveri Traders was served a notice of demand for Rs 8,00,000 of Government dues, and recovery proceedings began. The company then filed an appeal, and the appellate order reduced the dues to Rs 5,00,000. Which statement correctly reflects section 84 of the CGST Act?

When dues are reduced in appeal, no fresh demand notice is needed. The Commissioner intimates the reduction to the taxable person and to the authority handling recovery, and recovery continues for the reduced amount from the stage already reached, as provided in section 84.

  1. AThe Commissioner must serve a fresh notice of demand for Rs 5,00,000, and recovery restarts from the beginning
  2. BAll recovery proceedings lapse, and the Commissioner must start new proceedings for Rs 5,00,000
  3. CThe Commissioner need not serve a fresh notice, must intimate the reduction to the taxable person and the authority with whom recovery is pending, and recovery continues for the reduced amount from the stage reachedCorrect
  4. DRecovery continues for the original Rs 8,00,000 until the taxable person applies for a refund of the excess Rs 3,00,000

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 with whom recovery is pending. Recovery continues for the reduced amount from the stage at which it stood. The first option is wrong because no fresh notice is needed.

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