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CA Final · Indirect Tax Laws · Demands and Recovery

Sundaram Textiles Ltd. was served an order under section 78 of the CGST Act requiring payment of a demand. The order was served on 10 June. The proper officer recorded no reasons for requiring earlier payment. By which date must the amount be paid to avoid initiation of recovery proceedings?

The amount must be paid within three months from the date of service of the order, so by 10 September. A shorter period is possible only if the proper officer records in writing that it is expedient in the interest of revenue, which did not happen here.

  1. AWithin 30 days, i.e., by 10 July
  2. BWithin three months from service, i.e., by 10 SeptemberCorrect
  3. CWithin six months from service, i.e., by 10 December
  4. DWithin 15 days, i.e., by 25 June

Explanation

Section 78 requires payment within three months from the date of service of the order, failing which recovery proceedings are initiated. A shorter period applies only if the proper officer records reasons in writing that it is expedient in the interest of revenue. No reasons were recorded, so 10 June plus three months gives 10 September. The 30-day option wrongly borrows a period from other provisions.

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