The GST Authorities are initiating recovery proceedings by issuing 'proceedings u/s 78' alongwith the Order and require the taxpayer to pay the entire demand within 1 month from the date of the Order.
As per Section 78, recovery can commence only after the expiry of 3 months. However, proviso to Sec 78 allows the officer to recover the tax dues within a period of less than 3 months if the officer considers it expedient in the interest of the revenue .... for reasons to be recorded in writing.
The reason given for initiating recovery
1. As per Audit Report, liability detected is Rs ____ but taxpayer failed to discharge the same
2. Intimation in DRC 01A issued but taxpayer failed to discharge the tax
3. SCN issued but taxpayer failed to discharge the tax
4. Order passed confirming the liability
5. Considering the time already given to the taxpayer from audit to till date, liability to be discharged by the taxpayer within 30 days of the Order
Such practices of recovery even before expiry of statutory period of 3 months should be strongly opposed.
1. Taxpayer has 3 months time to file an appeal and once the appeal is filed upon payment of pre-deposit, the recovery proceedings for the balance amount shall be deemed to be stayed [Sec 107(7)]
2. The time taken from issuance of audit report to date of order is for finalization of tax liability and not time given to taxpayer to discharge liability
3. Proviso to Section 78 can be used in exceptional circumstances say cases where the officer believes that the taxpayer may be a fly by night operator
4. Factors like - Number of years in business and investment made in the business should also be taken into consideration by the officer before taking any action under proviso to Sec 78
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