Skip to content

CA Final · Indirect Tax Laws · Demands and Recovery

Meridian Traders Pvt Ltd is served with an order under the CGST Act demanding tax. The order was served on 10 June. The proper officer has recorded no special reasons for requiring earlier payment. Within what period must the company pay the amount, failing which recovery proceedings are to be initiated under section 78?

The company must pay within three months from the date of service of the order. If it does not, recovery proceedings are initiated. A shorter period is possible only where the proper officer records reasons in writing that this is expedient in the interest of revenue, which is absent 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 thirty days from the date of the order, irrespective of service

Explanation

Section 78 provides that an amount payable under an order must be paid within three months from the date of service of the order, 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 proper officer records reasons in writing, which has not happened here.

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