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CA Final · Indirect Tax Laws · Charge of GST

Vikram Metals Ltd is in default of GST of Rs 12 lakh with interest. A bank also holds a mortgage on its factory. Vikram Metals is not under insolvency proceedings. Another person, Raman, is liable to pay a GST penalty to the Government and owns a flat. Which statement best reflects section 82?

The Government's dues are a first charge on the property of both Vikram Metals and Raman. Section 82 covers tax, interest or penalty payable by a taxable person or any other person, overriding contrary laws except as provided in the Insolvency and Bankruptcy Code, 2016.

  1. AThe Government's dues are a first charge on the property of Vikram Metals, and likewise of Raman for his penalty, notwithstanding contrary laws, save as provided in the Insolvency and Bankruptcy Code, 2016Correct
  2. BThe bank's mortgage always ranks ahead of GST dues
  3. CThe first charge covers only tax and interest, not penalty
  4. DThe first charge applies only to the property of a registered taxable person, not any other person

Explanation

Section 82 makes any amount of tax, interest or penalty payable to the Government by a taxable person or any other person a first charge on that person's property, notwithstanding any contrary law, save as in the Insolvency and Bankruptcy Code. So both Vikram Metals and Raman are covered and penalty is included. Options (b), (c) and (d) contradict the text.

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