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CA Final · Indirect Tax Laws · Demands and Recovery

Mehta Textiles Pvt Ltd received an order under the CGST Act on 10 June requiring payment of tax. The order was served on the company on 10 June, and the proper officer recorded no reasons for requiring earlier payment. Within what period must the company pay the amount before recovery proceedings are initiated?

The company has three months from the date of service of the order. Under section 78, recovery proceedings start only if payment is not made in that period. A shorter period applies only where the proper officer records reasons in writing, and that did not happen here.

  1. AWithin one month from the date of service of the order
  2. BWithin three months from the date of service of the orderCorrect
  3. CWithin six months from the date of service of the order
  4. DWithin 30 days from the date of the order, whether or not it has been served

Explanation

Section 78 gives a taxable person three months from the date of service of the order to pay, failing which recovery proceedings are initiated. The period runs from service, not from the date of the order. A shorter period applies only if the officer records reasons in writing, and none were recorded here.

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