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CA Final · Indirect Tax Laws · Demands and Recovery

Vihaan Traders received an order under section 78 of the CGST Act, 2017 creating a tax demand. The order was served on 10 June. The proper officer did not record any reasons for requiring earlier payment. By when must Vihaan Traders pay the amount before recovery proceedings are initiated?

Vihaan Traders must pay within three months from the date of service of the order. Recovery proceedings start only after that period lapses. The time runs from service, not from passing of the order, and a shorter period applies only if the officer records reasons in writing.

  1. AWithin three months from the date of service of the orderCorrect
  2. BWithin one month from the date of service of the order
  3. CWithin three months from the date of the order, irrespective of service
  4. DWithin six months from the date of service of the order

Explanation

Section 78 requires payment 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 passing, so the third option is wrong. A shorter period applies only if the officer records reasons in writing, which has not happened here.

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