Page 36 - GSTL_11th June 2020_Vol 37_Part 2

J44 GST LAW TIMES [ Vol. 37

RECOVERY OF ARREARS UNDER GST — A
COMPLETE ANALYSIS
By
R. Srivatsan
*
ADDITIONAL ASSISTANT DIRECTOR OF C. EX. & GST, NATIONAL
ACADEMY OF CUSTOMS, INDIRECT TAXES AND NARCOTICS

Tax administration in Central Excise & Service
Tax earlier and now under GST regime envisages that the
taxpayer shall undertake self-assessment of tax liabilities
payable and after payment of such tax, submit returns to
the department. The department thereafter has been mandated to scrutinize the
returns filed by the taxpayers and in case of any short/non-levy of duty, takes
action by way of issuing demand-cum-show cause notice (SCN) for recovery of
the short assessed/unpaid amount. The show cause notice is then adjudicated by
the appropriate authority competent to pass an appealable adjudication order.
Any amount recoverable from the taxpayer due to confirmation of such demands
in favour of the department by virtue of Orders-in-Original (OIOs), or further
Orders-in-Appeal (OIAs), Tribunal’s orders, and Courts’ orders, but not paid by
the taxpayer becomes arrears. Generally, the arrears of revenue arise as a result
of the following situations :
 Confirmation of demands by the adjudicating authority;
 Rejection of appeal of the taxpayer by the appellate authority;
 Grant of stay applications with condition of pre-deposits;
 Order in favour of the department by Hon’ble Tribunals, High
Courts and Supreme Court;
After such due process of law, Recovery of arrears constitutes a crucial
and imperative function of the Department of Revenue. The main statutory pro-
visions dealing with recovery of arrears earlier under Central Excise has been
prescribed under Section 11A of the Central Excise Act, 1944, and in Service Tax
the powers are vested under Section 73 of the Finance Act, 1994 which invest the
Proper officers to take action for recovery of arrears by way of issue of demand
and pursing with the taxpayer. In case recovery is not effected under Section 11A
of CEA, 1944/Section 73 of the Finance Act, 1994, the provisions under Section 11
of CEA, 1944 and Section 87 of the Finance Act, 1994 further empowers the de-
partment to take coercive and forcible actions such as deducting any amount
payable to the defaulter, detaining any movable or immovable property or refer-
ring the case to District Collector for recovery of the dues as if it were an arrear of
land revenues. In fact, Section 83 of Finance Act, 1994 allowed some sections of
the Central Excise Act, 1944, as in force from time to time, applicable to Service
Tax matters also. The process of recovery of arrears starts with confirmation of
demand against the defaulter taxpayer and includes a number of appellate fo-
rums wherein taxpayer as well as the department can go for appeal. The process
of recovery of arrears is depicted in following flowchart as it existed under earli-
er tax regime :
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* The views expressed in this article are the personal views of the author.
GST LAW TIMES  11th June 2020  36