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CA Final · Indirect Tax Laws · Demands and Recovery

Sunrise Pharma Ltd was served a notice of demand for Rs 4,00,000. During its appeal, the appellate authority enhanced the dues to Rs 6,50,000. Which action is required under section 84 of the CGST Act?

A fresh notice is needed only for the increase of Rs 2,50,000. Recovery on the original Rs 4,00,000 notice can continue from the stage it had reached, without any new notice for that portion, as section 84 provides.

  1. AAnother notice of demand for Rs 2,50,000 is served, and recovery of the original Rs 4,00,000 may continue without a fresh noticeCorrect
  2. BA fresh notice for the full Rs 6,50,000 is served, and the earlier recovery is cancelled
  3. CNo further notice is needed, and recovery continues for Rs 6,50,000
  4. DRecovery of the original Rs 4,00,000 is suspended until the enhanced amount is paid

Explanation

Under section 84(a), where dues are enhanced, the Commissioner serves another notice only for the enhanced amount, which is Rs 2,50,000 (6,50,000 - 4,00,000). Recovery on the original notice continues from its stage without a fresh notice. Serving a notice for the full amount is not required.

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