CBIC issues instructions for initiating early GST recovery

The CBIC has said the Principal Commissioner or commissioner level officers can issue directions to recover GST dues before the stipulated three months of serving of demand order.

Under the GST law, if a taxable person does not pay the amount specified in an order passed under the CGST Act within three months from the date of service of such order, the tax officer can initiate recovery proceedings only after the expiry of this period.

However, in exceptional cases where it is necessary in the interest of revenue, the proper officer, after recording the reasons in writing, may ask a taxable person to pay the amount within a period shorter than three months.

The Central Board of Indirect Taxes and Customs (CBIC) said it has been brought to its notice that some of the field formations are initiating recovery before the specified period of three months from the date of service of the order, even in the cases where the taxable person has not been specifically required by the proper officer, for reasons to be recorded in writing, for payment of such amount within a lesser period.

"Therefore, in order to ensure uniformity in the implementation of the provisions of law across the field formations, the board hereby issues the following instructions to be followed in cases where it is necessary, in the interest of revenue, to initiate recovery before the period of three months from the date of service of the order," the CBIC said.

Generally, recovery proceedings are undertaken by the jurisdictional Deputy or Assistant Commissioner of Central Tax. In cases where early recovery is deemed necessary, the jurisdictional Deputy or Assistant Commissioner must present the case, along with the reasons for early recovery, to the jurisdictional Principal Commissioner or Commissioner of Central Tax, the CBIC said.

If satisfied with the reasons, the Principal Commissioner or Commissioner must record these reasons in writing. Upon recording the reasons in writing, the Principal Commissioner or Commissioner may issue directions to the concerned taxable person to pay the specified amount in less than three months from the date of service of the order.

Moore Singhi executive director Rajat Mohan said this instruction strikes a balance between safeguarding revenue and maintaining ease of doing business. By providing clear guidelines and mandating proper documentation for early recovery actions, the instructions enhance transparency and predictability in tax administration.

"It is also hoped that state tax administrations will issue similar instructions to address the challenges faced by taxpayers under state jurisdictions. This coordinated approach would further streamline tax compliance and foster a fairer tax environment across the country," Mohan added.