Skip to content

CA Final · Indirect Tax Laws · Charge of GST

Meridian Foods Ltd has GST dues of Rs 8 lakh. A bank has also lent to Meridian against a mortgage of its factory, and the factory is to be sold to recover dues. Which statement is correct under the CGST Act about the Government's claim on the factory?

Tax, interest or penalty payable to the Government is a first charge on the taxable person's property, despite contrary laws, subject only to what the Insolvency and Bankruptcy Code, 2016 provides. So an earlier mortgage does not automatically rank ahead of the GST dues.

  1. ATax, interest or penalty payable to the Government is a first charge on the property, notwithstanding any contrary law, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016Correct
  2. BThe bank's mortgage always ranks ahead of GST dues as it was created earlier
  3. CThe tax is a charge only on goods in stock and not on immovable property
  4. DThe tax is a first charge only if the proper officer obtains a court order

Explanation

Section 82 makes any amount of tax, interest or penalty payable to the Government a first charge on the taxable person's property, notwithstanding anything contrary in any law, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016. Option B ignores the non obstante clause. Options C and D add limits that the section does not contain.

Did you get it right without looking?

One question tells you little. A timed set on Charge of GST shows your real accuracy, how long you take and where you lose marks.

Practise Charge of GSTFree diagnostic mock

More Charge of GST questions