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CA Final · Indirect Tax Laws · Demands and Recovery

Vihaan Traders, Pune, received an order under section 73 demanding tax of ₹4,00,000 and the order has become final. It was served on 10 June. Under section 78 of the CGST Act, within what period must Vihaan pay the amount, failing which recovery proceedings shall be initiated, assuming the proper officer has recorded no reasons for a shorter period?

The amount must be paid within three months from the date of service of the order. Only if the proper officer records reasons in writing, considering it expedient in the interest of revenue, can a shorter period be specified. Otherwise recovery proceedings begin after three months.

  1. AWithin 30 days 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 the order
  4. DWithin 90 days from the date of filing the return for the period

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, for reasons recorded in writing, finds it expedient in the interest of revenue. No such reasons exist here, so the three-month period applies.

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