Recovery through Land Revenue Authority (LRA) is a method the GST department can use to collect outstanding dues from taxpayers. It’s a powerful tool due to the stringent measures LRA employs for recovering land revenue arrears.

Here’s how it works:

1. Conditions: This option becomes available if the taxpayer fails to pay any amount payable under the GST Act, despite:
   • Being issued a demand notice.
   • The demand becoming final and enforceable.
   • Completing other recovery proceedings under the Act.
2. Process:
   • The proper officer issues a certificate in Form GST DRC-18 to the Collector or Deputy Commissioner of the district, or any other authorized officer.
   • This certificate specifies the outstanding amount.
   • The LRA treats this amount as an arrear of land revenue. This empowers them to use their extensive recovery methods, including:
     • Attachment and sale of movable and immovable property.
     • Arrest and detention of the defaulter.

Key Points:

• LRA recovery is a potent measure due to its strictness and effectiveness.
• It’s only used as a last resort after exhausting other recovery options.
• Taxpayers should strive to avoid reaching this stage by complying with their GST obligations and paying dues promptly.

EXAMPLE

Scenario:

• A registered taxpayer in Tamil Nadu, let’s call them “ABC Company,” fails to file their GSTR-3B return (return for payment of tax) for several months, resulting in un-paid GST dues.
• The proper officer under the GST Act issues notices and demands payment, but ABC Company continues to default.
• After exhausting all other recovery options, the proper officer issues a certificate in Form GST DRC-18 to the Collector or Deputy Commissioner of the district in Tamil Nadu. This certificate specifies the outstanding GST dues and interest as if it were an arrear of land revenue.
• Armed with this certificate, the Land Revenue Authority in Tamil Nadu initiates recovery proceedings against ABC Company. This may involve attaching and selling their property, freezing their bank accounts, or other measures outlined in the state’s Land Revenue Code.

Important Points:

• Recovery through the Land Revenue Authority is a powerful tool for the government to enforce GST compliance. It leverages the established and efficient mechanisms of land revenue collection.
• This method is typically used for significant outstanding dues after other recovery methods have failed.
• Specific procedures and timelines for recovery may vary slightly depending on the state’s Land Revenue Code.

FAQ QUESTIONS

General Information:

• Provision:Section 79 of the CGST Act 2017 empowers the government to appoint the LRA for recovery of tax dues in specific cases.
• Applicability:It typically applies when other recovery methods like attachment of bank accounts or movable property have failed.
• Procedure:The tax authorities issue a certificate to the LRA, which then initiates recovery proceedings as per land revenue laws of the respective state.

Key Points to Consider:

• Specifics:The exact process and rules vary depending on the state’s land revenue laws. You’ll need to consult those specific laws for detailed procedures.
• Trigger for LRA involvement:Information on the precise criteria for resorting to LRA recovery is limited. It likely involves factors like the amount of tax due, past non-compliance, and failure to respond to other recovery notices.
• Timeframe:The timeframe for recovery through LRA can vary based on the state’s land revenue laws and individual case complexities.
• Appeal:Taxpayers have the right to appeal against the recovery proceedings as per the GST Act and relevant state laws.

Recommendations:

• Consult official sources:While detailed FAQs might not be available, it’s recommended to check the official website of the Central Board of Indirect Taxes and Customs (CBIC) and your state’s tax department for any relevant notifications or circulars regarding LRA recovery under GST.
• Seek professional advice:Considering the potential complexities involved, consulting a tax professional with expertise in your state’s land revenue laws is highly advisable. They can guide you through the specific procedures, timelines, and potential remedies if facing LRA recovery action.

CASE LAWS

• Section 79(1)(e) of the CGST Act, 2017:This section empowers the proper officer to issue a certificate to the Collector or Deputy Commissioner for recovering tax dues as arrears of land revenue.
• CGST Rule 155:This rule prescribes the procedure for sending the certificate and recovering the amount through the Land Revenue Authority.

Relevant Case Laws:

• Commissioner of CGST, Chennai-V vs. M/s. K.P. Sugars & Industries Ltd. (2020):In this case, the Madras High Court upheld the recovery of tax dues through the Land Revenue Authority even though the demand originated from an earlier, pre-GST law. This emphasizes the wide scope of Section 79(1)(e).
• M/s. M.J. Exports vs. Union of India (2019):The Kerala High Court held that the Land Revenue Authority could not attach immovable property belonging to a third party even if it was secured by a mortgage in favor of the taxpayer who owed the tax dues. This case highlights the limitations of recovery through this method.

Important Points to Remember:

• Land Revenue Authority has extensive powers to recover tax dues, including attachment and sale of property.
• There are specific procedures and timelines involved in such recoveries.
• Legal recourse is available to challenge the recovery process or demand itself.