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Demand & Recovery Under GST

A confirmed demand and an actual recovery aren’t the same event, and neither is provisional attachment the same power as ordinary recovery. A Supreme Court ruling from August 2025 drew that line more sharply than ever before.

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Recovery provisions and their judicial interpretation continue to evolve. This article is for general information and does not constitute tax advice.

Once a Demand Is Confirmed: The Three-Month Window

Under Section 78, recovery generally begins three months after the demand order (DRC-07) is served, giving time to pay voluntarily or appeal. That window can be shortened where the officer records in writing that it’s expedient in revenue’s interest to act sooner.

How the Department Actually Recovers

Section 79 provides the ordinary toolkit: deducting from anything the department itself owes the taxpayer, recovering from a third party who owes the defaulter money via a DRC-13 garnishee notice, detaining and selling goods or property, or recovering as an arrear of land revenue.

Provisional Attachment: A Different, More Aggressive Power

Section 83 allows attaching property, including bank accounts, before a demand is even confirmed, to protect revenue during investigation. It’s pre-emptive, not a substitute for Section 79 recovery once a demand is confirmed. Under Section 83(2), attachment ceases after one year unless a fresh order issues on genuinely new grounds. In August 2025, the Supreme Court in Kesari Nandan Mobile ruled that authorities cannot repeatedly “renew” attachment orders past the one-year period, building on Radha Krishan Industries (2021), which described the power as draconian, requiring strict conditions and utmost caution.

FAQs: Demand & Recovery

If a bank account has been attached under Section 83 for over a year, what should be done?

Filing Form GST DRC-22A under Rule 159(5) is the direct route to formally seek lifting of the attachment.

Is provisional attachment the same as the department actually recovering a confirmed demand?

No, attachment is pre-emptive and protective, not a mechanism for recovering tax already confirmed; that happens through Section 79 instead.

If a demand is already confirmed, can the department still rely on Section 83 attachment instead of Section 79 recovery?

Generally no, case law has treated continued reliance on Section 83 after adjudication as an overreach.

Can a third party who owes money to a GST defaulter simply ignore a DRC-13 notice?

No, a third party served with one is legally bound to pay the department directly; non-compliance can make them personally liable.

Does the three-month window under Section 78 mean nothing can happen for three months regardless?

No, it can be shortened where the officer records in writing that it’s expedient to act sooner.

Last updated on 11 August 2026