Demand and Recovery Provisions under Revised Model GST Law

The Revised Model GST Law has been introduced in India in the year 2017, with the aim to simplify the GST regime by making it more user-friendly and easier to comply with. One of the most important aspects of the Revised Model GST Law is the provisions related to demand and recovery, which have been significantly revised from the earlier version of the law. In this article, we will take a closer look at the provisions related to demand and recovery under the Revised Model GST Law.

What is Demand under Revised Model GST Law?

The demand under the Revised Model GST Law refers to the amount of tax, interest or penalty that is payable by the taxpayer to the government. This demand can arise due to various reasons such as non-payment of tax, short payment of tax, erroneous refund or input tax credit claimed, etc. Under the Revised Model GST Law, the demand can be raised by the tax authorities through a notice issued to the taxpayer.

The notice of demand issued by the tax authorities must contain the following details:

1. The amount of tax, interest or penalty demanded.

2. The reason for issuing the demand.

3. The period for which the demand is being raised.

Once the taxpayer receives the notice of demand, he has to pay the amount demanded within 30 days of receipt of the notice. If the taxpayer fails to pay the amount demanded within the prescribed time limit, the tax authorities can initiate recovery proceedings against him.

What is Recovery under Revised Model GST Law?

The recovery under the Revised Model GST Law refers to the process of collecting the amount of tax, interest or penalty from the taxpayer in case of non-payment of the demand raised by the tax authorities. The tax authorities can initiate recovery proceedings against the taxpayer if he fails to pay the demanded amount within the prescribed time limit.

The recovery proceedings can be initiated by the tax authorities by any of the following methods:

1. Attachment of property or bank accounts of the taxpayer.

2. Appointment of a Receiver for the taxpayer's property.

3. Distraint of the taxpayer's movable or immovable property.

4. Arrest of the taxpayer in certain cases.

5. Any other prescribed method.

It is important to note that the tax authorities cannot initiate recovery proceedings against the taxpayer if he files an appeal against the notice of demand within the prescribed time limit. The recovery proceedings can be initiated only after the appeal is disposed of by the appellate authority.

Time Limit for Issuing Demand Notice and Recovery Proceedings

The Revised Model GST Law has prescribed a time limit for issuing demand notice and initiating recovery proceedings against the taxpayer. The time limit for issuing the demand notice is three years from the date of filing of the GST return for the relevant tax period. Similarly, the time limit for initiating recovery proceedings against the taxpayer is three years from the date of the demand notice.

Conclusion

The demand and recovery provisions under the Revised Model GST Law have been significantly revised from the earlier version of the law. The provisions related to demand and recovery are important for business owners and startup founders to understand, as non-compliance with these provisions can lead to serious penalties and legal consequences. It is advisable for the taxpayers to comply with the provisions related to demand and recovery under the Revised Model GST Law to avoid any legal liabilities.