Sec 79 – Recovery of tax

You are here :Home>Bare Law>Sec 79 – Recovery of tax
Sec 79 – Recovery of tax 2017-04-14T11:25:58+00:00
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • Ashish BadalaCA Ashish Badala
    Moderator
    Post count: 184
    Topics: 181
    Replies: 3
    Been thanked: 5 times
    #1399 |

    (1) Where any amount payable by a person to the Government under any of the provisions of this Act or the rules made thereunder is not paid, the proper officer shall proceed to recover the amount by one or more of the following modes, namely:–
    (a) the proper officer may deduct or may require any other specified officer to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other specified officer;
    (b) the proper officer may recover or may require any other specified officer to recover the amount so payable by detaining and selling any goods belonging to such person which are under the control of the proper officer or such other specified officer;
    (c) (i) the proper officer may, by a notice in writing, require any other person from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the Government either forthwith upon the money becoming due or being held, or within the time specified in the notice not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount;
    (ii) every person to whom the notice is issued under sub-clause (i) shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary;
    (iii) in case the person to whom a notice under sub-clause (i) has been issued, fails to make the payment in pursuance thereof to the Government, he shall be deemed to be a defaulter in respect of the amount specified in the notice and all the consequences of this Act or the rules made thereunder shall follow;
    (iv) the officer issuing a notice under sub-clause (i) may, at any time, amend or revoke such notice or extend the time for making any payment in pursuance of the notice;
    (v) any person making any payment in compliance with a notice issued under sub-clause (i) shall be deemed to have made the payment under the authority of the person in default and such payment being credited to the Government shall be deemed to constitute a good and sufficient discharge of the liability of such person to the person in default to the extent of the amount specified in the receipt;
    (vi) any person discharging any liability to the person in default after service on him of the notice issued under sub-clause (i) shall be personally liable to the Government to the extent of the liability discharged or to the extent of the liability of the person in default for tax, interest and penalty, whichever is less;
    (vii) where a person on whom a notice is served under sub-clause (i) proves to the satisfaction of the officer issuing the notice that the money demanded or any part thereof was not due to the person in default or that he did not hold any money for or on account of the person in default, at the time the notice was served on him, nor is the money demanded or any part thereof, likely to become due to the said person or be held for or on account of such person, nothing contained in this section shall be deemed to require the person on whom the notice has been served to pay to the Government any such money or part thereof;
    (d) the proper officer may, in accordance with the rules to be made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus amount, if any, to such person;
    (e) the proper officer may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the district in which such person owns any property or resides or carries on his business or to any officer authorised by the Government and the said Collector or the said officer, on receipt of such certificate, shall proceed to recover from such person the amount specified thereunder as if it were an arrear of land revenue;
    (f) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the proper officer may file an application to the appropriate Magistrate and such Magistrate shall proceed to recover from such person the amount specified thereunder as if it were a fine imposed by him.
    (2) Where the terms of any bond or other instrument executed under this Act or any rules or regulations made thereunder provide that any amount due under such instrument may be recovered in the manner laid down in sub-section (1), the amount may, without prejudice to any other mode of recovery, be recovered in accordance with the provisions of that sub-section.
    (3) Where any amount of tax, interest or penalty is payable by a person to the Government under any of the provisions of this Act or the rules made thereunder and which remains unpaid, the proper officer of State tax or Union territory tax, during the course of recovery of said tax arrears, may recover the amount from the said person as if it were an arrear of State tax or Union territory tax and credit the amount so recovered to the account of the Government.
    (4) Where the amount recovered under sub-section (3) is less than the amount due to the Central Government and State Government, the amount to be credited to the account of the respective Governments shall be in proportion to the amount due to each such Government.

    Priya MadrechaPriya Madrecha
    Moderator
    Post count: 280
    Topics: 4
    Replies: 276
    Been thanked: 1 time

    79.1 Introduction
    The section empowers the departmental officers to collect/recover any amount which is payable under GST Act. Section 79 provides for the manner in which the recovery proceedings can be carried out.
    79.2 Analysis
    (i) When any amount that is payable by any person (hereinafter referred to as defaulter) to Government is not paid, the officer can adopt one or more of the methods set out in section 79 for recovery of amounts payable. The methods are :
    (a)    Deduction out of any money owing to defaulter:
         There should be some money which is being owed by the Government to
    defaulter;
         The amount payable can be deducted out of the said amount due to
    defaulter;
         The deduction can be done by the proper officer himself or he may ask any other specified officer to do so.
    (b)    By detaining and selling the goods belonging to defaulter:
         There should be goods which are under the control of the proper officer or other specified officer;
         Such goods should belong to the person who is liable to pay any amount.
         The goods may be detained and sold by the proper officer or such other specified officer on request by the proper officer;
         Out of the realisation, the amount payable by defaulter shall be recovered.
    (c)    Recovery from any other person who owes money to defaulter.
         This applies when any other person –
    o     has become due to pay money to the defaulter; o     is likely to become due to pay money to the defaulter; o     holds money for or on account of the defaulter; o     may subsequently hold money for or on account of the defaulter.
         In such cases the proper officer may issue notice to such other person to pay to the credit of the Government – o     forthwith
        upon the money becoming due or
        being held, or  o at or within the time specified in the notice not being before the money becomes due or is held.
         The amount directed to be paid in the notice shall be –
    o    Where the amount due/held by such other person is more than amount due by the defaulter – to the extent of amount due by the defaulter;
    o    Where the amount due/held by such other person is equal to or less than amount due by defaulter – whole of money due/held.
         Such other person to whom such notice is issued is bound to comply with the same.
         In cases where such notice is issued to a post office, banking company or an insurer, they are required to comply with the same without insisting on production of any passbook, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like, though that might be the normal practice.
         If such person to whom such notice is issued, fails to comply, he shall be treated as defaulter to the extent of the amount mentioned in the notice and all other consequences under the law shall follow;
         The notice so issued may be amended or revoked or time may be extended for making any payment;
         The payment made by Such other person in accordance with the notice issued, shall be deemed to have made the payment on behalf of such defaulter and the amount credited to the government shall be deemed to constitute the discharge of liability of such defaulter to the extent of the payment made.. Consequently no civil suit or other proceedings could be filed or initiated by the defaulter on the notice, who has complied with this provision..
         Instead of crediting the amount to the government, if such person makes the payment to defaulter, then such other person shall be personally liable to the Government to the extent of the amount due by the defaulter or amount discharged to the defaulter whichever is lower.
         However such person shall not be personally liable, if he proves to the officer issuing the notice that
    o    the money demanded or any part thereof was not due to the person in default or
    o    at the time of service of the notice he did not hold any money for or on account of the person in default,
    o    the money was not demanded from him; or
    o    any part of the money demanded is not likely to become due to such other person or
    o    any part of the money will not likely be held for or on account of such person.
    (d)    Collection by detention of any movable or immovable property.
     On authorisation by competent authority, proper officer in accordance with the rules framed for this purpose,
    o    Detain any movable or immovable property belonging to defaulter; o     After which detain such property till the amount payable is paid.
     If any part of the amount payable or cost of distress or keeping the property is not paid within 30 days from such distress, the proper officer may sell the property and with the proceeds he may adjust towards o amount payable;
    o    costs including the cost of sale remaining unpaid;
         After such adjustment, the remaining surplus shall be returned to the defaulter.
    (e)    Recovery through District Collector:
     Proper officer may prepare a certificate signed by him specifying the amount due from the defaulter.
         Such certificate will be sent to the Collector of the District in which the defaulter
    o    owns any property; or o     resides; or o     carries on his business.
     The DC on receipt of such certificate shall proceed to recover from such defaulter the amount specified in the certificate as if such amount is arrears of land revenue.
    (f)    Recovery through Magistrate:
         This provision has overriding effect over Code of Criminal Procedure;
         In this case the proper officer may file an application to the appropriate Magistrate;
     The Magistrate to whom application is made shall proceed to recover from the defaulter the amount specified in the application as if it is fine imposed by such Magistrate.
    (ii)    Under the GST Act, rules or regulations there would be requirement to execute bond or other instruments. If such bond/instrument provides that the amount becoming due shall be recovered in terms of Section 79(1), then the recovery shall be effected as discussed above irrespective of whether other mode of recovery exists or not.
    (iii)    Further it is also Provided that if either SGST Officer/ UTGST Officer while recovering SGST/UTGST arrears may also recover any amount due from the defaulter the amount due by him under CGST Act as if it is SGST/UTGST and later pass it on to the Central Government.
    (iv)    Similar provision also exists in SGST/UTGST Act for recovery of any amount due under SGST Act/UTGST Act to be recovered by CGST officers while recovering arrears of
    CGST as though the amount due was CGST and later pass it on to the concerned State Government/Union Territory.
    (v)    It is also Provided that in case where the SGST officer/UTGST officer also collects CGST in the course of collection of SGST/UTGST or viceversa, where the amount recovered is not fully covering both the liabilities, the amount collected has to be apportioned between Centre and State/Union Territory in the same proportion of the amounts due.
    79.3    Comparative Review
    Under the present tax laws, similar provision exists in Central Excise Law , Customs Law  as well as Service Tax Law7. In the context of section 87 of the Finance Act, 1994, the Karnataka High Court in UOI Vs Prashanthi, 2016-TIOL-1127-HC-KAR-ST held that such recovery cannot be effected before determination of liability under section 73.
    Also, similar provision also exists in all most all the State VAT laws as well.
    79.4    FAQ
    Q1. What are the methods of recovery as prescribed in Section 79?
    Ans. —     Deduction out of any money owing to defaulter.
    —     By detaining and selling the goods belonging to defaulter.
    —     Recovery from any other person who owes money to defaulter.
    —     Collection by detention of any movable or immovable property.
    —     Recovery through District Collector.
    —     Recovery through Magistrate.
    Q2. Can the authorities use more than one of the methods for the recovery proceedings?
    Ans. Yes, they can use one or more methods at the option and choice of the proper officer.
    Q3. In case of recovery of SGST/UTGST by CGST officer in the course of recovery of CGST, where the total amount recovered is ` 2 Crore whereas the amounts due were 2 Crores of CGST and 3 Crore of SGST/UTGST, to which account, the amount recovered would be allocated?
    Ans. 2 Crores recovered will be allocated between Centre and State/Union Territory in the proportion of 2:3.
    79.5    MCQ
    Q1. Recovery of amount payable by a defaulter can be made from __________
    (a)    customer
    (b)    bank
    (c)    post office
    (d)    all the above.
    Ans.  (d) all the above.
    Q2. Recovery of amount payable by a defaulter can be made _________
    (a)    after determination of liability under section 73 or 74
    (b)    even before issue of notice under section 73 or 74
    (c)    any time
    (d)    at the discretion of the proper officer.
    Ans.  (a) after determination of liability under section 73 or 74
    Q3. After how many days, the proper officer may cause the sale of distressed property?
    (a)    30 days
    (b)    60 days   (c)  90 days
    (d)      120 days
    Ans.  (a) 30 days

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.