Section 78 of CGST Act, 2017 : Section 78: Initiation Of Recovery Proceedings

Explanation using Example

Imagine a business owner, Mr. Sharma, who has been audited by the tax authorities. The audit reveals that he has underpaid Goods and Services Tax (GST) due to an error in calculating the tax on some of his products. Consequently, the tax authorities issue an order for Mr. Sharma to pay the underpaid amount.

According to Section 78 of The Central Goods and Services Tax Act, 2017, Mr. Sharma is required to pay the amount specified in the order within three months from the date the order was served to him. If he fails to do so, the authorities will initiate recovery proceedings to collect the outstanding tax.

However, if the tax officer believes it is necessary to protect government revenue, they can mandate Mr. Sharma to settle the dues in less than three months. If this happens, the officer must document the reasons for this decision in writing.