Recovery Proceedings u/s 79 Can Be Initiated Before 3 Months Only in Exceptional Cases, Detailed Instructions Issued by CBIC

Instruction No. 01/2024-GST dated May 30th, 2024

The CBIC has observed that some field formations are initiating recovery proceedings before the stipulated 3-month period without explicit orders for early payment. Consequently, the CBIC has issued detailed guidelines for the CGST field formations for initiating recovery proceedings before the specified period of 3 months from the date of service of order. The CBIC has clarified that such recovery before the specified time period can be initiated only in exceptional cases.

Also, the Jurisdictional Principal Commissioner/ Commissioner shall examine the reasons provided. If he considers that it is expedient in the interest of the revenue to recover the amount before the 3 months’ time period, they must record the reasons in writing. Thereafter, he may issue the directions to the concerned taxable person and send the copy of such directions to the Jurisdictional Deputy or Assistant Commissioner. It is further clarified that there must be specific reasons clearly outlining the circumstances prompting such early action. Such reasons could include:

• High risk to revenue involved in waiting till the completing of three months
• Concerned taxable person may close their business operations in near future
• Possibility of default by the taxable person due to his declining financial conditions or impeding insolvency
• There are chances that proceedings may be initiated under IBC Act

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