Section 79 of the Central Goods and Services Tax Act, 2017 deals with the recovery of amounts that remain unpaid to the Government under the GST law.
The provision gives the proper officer several statutory methods for recovering outstanding GST dues. These recovery mechanisms can be used for amounts payable under the CGST Act or the rules made under it, including tax, interest, penalty and other amounts that have become recoverable.
Section 79 is therefore an important provision in the GST recovery framework. It operates particularly after an amount has become payable and remains unpaid. Section 78 generally determines when recovery proceedings can begin for an amount payable pursuant to an order, while Section 79 provides the methods through which the unpaid amount can be recovered.
What Is Section 79 of the CGST Act?
Section 79 is titled “Recovery of tax.”
The basic rule under Section 79(1) is that where any amount payable by a person to the Government under the CGST Act or the rules made under it is not paid, the proper officer shall proceed to recover the amount through one or more of the modes specified in the section.
The recovery mechanisms include:
- Deduction from money owed to the defaulter.
- Detention and sale of goods belonging to the defaulter.
- Recovery from a third person who owes money to, or holds money for, the defaulter.
- Distraining and selling movable or immovable property.
- Recovery through the district Collector or other authorised revenue authority as an arrear of land revenue.
- Recovery through a Magistrate as if the amount were a fine.
Section 79 also contains provisions for recovery under bonds or other instruments, recovery by State or Union territory tax officers, and apportionment between the Central and State Governments where applicable.
Why Is Section 79 Important?
GST is based on self-assessment and regular payment of tax. When a person fails to pay an amount that has become payable under the GST law, the Government needs a statutory mechanism to recover that amount.
Section 79 provides that mechanism.
It allows the tax administration to recover outstanding dues without relying solely on voluntary payment by the taxpayer.
For example, if a taxable person has an unpaid GST liability and the amount has become recoverable, the department may use an appropriate recovery mechanism such as:
Bank or Government dues → Deduction
Goods → Detention and sale
Customer/debtor → Third-party recovery notice
Property → Attachment/distress and sale
Revenue authority → Recovery as land revenue
Magistrate → Recovery as a fine
The particular method depends on the circumstances and the applicable legal provisions.
When Does Section 79 Apply?
Section 79 applies when an amount payable to the Government remains unpaid.
The statutory language is broader than simply saying “GST tax.”
It covers any amount payable by a person to the Government under the provisions of the CGST Act or the rules made under it.
Depending on the circumstances, this can include:
- tax;
- interest;
- penalty;
- other amounts payable under the Act or rules; and
- specified self-assessed tax and interest recoverable under Section 75(12).
Therefore, Section 79 should not be understood as applying only to tax determined through an assessment order.
Section 78 and Section 79: How Do They Work Together?
Section 78 and Section 79 are closely connected.
Section 78
Section 78 deals with the initiation of recovery proceedings.
Normally, where an amount is payable pursuant to an order passed under the CGST Act, the taxable person is required to pay it within three months from the date of service of the order. If the amount remains unpaid, recovery proceedings are initiated.
The proviso to Section 78 permits a shorter payment period where the proper officer considers it necessary in the interest of revenue and records reasons in writing.
Section 79
Section 79 provides the actual statutory modes of recovery once an amount is recoverable.
Therefore, a simple way to remember the distinction is:
Section 78 = When can recovery begin?
Section 79 = How can the outstanding amount be recovered?
CBIC’s Instruction No. 01/2024-GST specifically explains this relationship and states that, in the ordinary situation, recovery proceedings following an order should begin after the three-month period under Section 78, unless the shorter period permitted by the proviso to Section 78 has been invoked.
Section 79(1)(a): Recovery by Deduction From Money Owed
The first recovery mechanism is deduction from money owed to the person who has defaulted.
Under Section 79(1)(a), the proper officer may deduct, or require another specified officer to deduct, the amount payable from any money owing to that person which is under the control of the proper officer or specified officer.
Example
Suppose a business has an outstanding GST liability of ₹5 lakh.
The Government is holding ₹2 lakh payable to that business under another transaction.
The proper officer may use the statutory mechanism to recover the appropriate amount from the money under Government control.
Rule 143 provides the procedure for this mode of recovery and prescribes FORM GST DRC-09 for requiring a specified officer to deduct the amount.
Section 79(1)(b): Detention and Sale of Goods
The second mechanism allows recovery by detaining and selling goods belonging to the defaulter where those goods are under the control of the proper officer or another specified officer.
The department does not necessarily have to sell all goods belonging to the taxpayer.
Rule 144 provides that the proper officer should prepare an inventory and estimate the market value of the goods and proceed to sell only so much of the goods as may be required to recover the amount payable along with the administrative expenses of recovery.
Auction of Goods
Under Rule 144, goods may be sold through auction, including e-auction.
A notice in FORM GST DRC-10 is issued for the auction.
Ordinarily, the last date for bids or the auction date should not be earlier than 15 days from the date of the auction notice. However, special treatment is provided for goods that are perishable or hazardous, or where storage expenses are likely to exceed their value.
After a successful auction:
- the successful bidder receives a payment notice in FORM GST DRC-11;
- the bidder is required to make payment within the prescribed period;
- after full payment, possession is transferred; and
- a certificate in FORM GST DRC-12 is issued.
If the defaulter pays the recoverable amount and applicable recovery expenses before the auction notice is issued, the auction process can be cancelled and the goods released.
Section 79(1)(c): Recovery From a Third Person
One of the most important recovery mechanisms under Section 79 is recovery from a third person.
This mechanism can be used where another person:
- owes money to the defaulter;
- may owe money to the defaulter in the future;
- holds money for the defaulter; or
- may subsequently hold money for the defaulter.
The proper officer may issue a written notice directing that third person to pay the Government the required amount instead of paying it to the defaulter.
This is sometimes described as a garnishee-type recovery mechanism.
Example
Suppose:
- Company A owes GST dues of ₹10 lakh.
- Customer B owes Company A ₹7 lakh.
The proper officer may issue a notice to Customer B requiring the ₹7 lakh, or the appropriate amount specified in the notice, to be paid to the Government instead of Company A, subject to Section 79.
This allows the Government to recover dues from money that is payable to the defaulting taxpayer.
Third Person Must Comply With the Notice
Section 79(1)(c)(ii) provides that the person receiving the recovery notice is bound to comply with it.
The provision specifically states that where such notice is issued to entities such as:
- a post office;
- a banking company; or
- an insurer,
it is not necessary to produce a passbook, deposit receipt, policy or similar document merely for making the required entry or endorsement before payment.
This makes the third-party recovery mechanism operational even where the money is held through regulated financial institutions.
What Happens If the Third Person Does Not Pay?
Section 79 contains a significant consequence.
Where the person receiving the third-party recovery notice fails to make the required payment to the Government, that person is deemed to be a defaulter for the amount specified in the notice.
The consequences under the CGST Act and rules can then apply.
Therefore, a third party should not ignore a valid recovery notice merely because the original GST liability belongs to someone else.
Recovery Notice Can Be Amended or Revoked
The officer who issues a third-party recovery notice may:
- amend the notice;
- revoke the notice; or
- extend the time for making payment.
This flexibility is specifically provided in Section 79(1)(c)(iv).
Payment by Third Person Gives Discharge
Where a third person makes payment in compliance with a Section 79 notice, the payment is treated as having been made under the authority of the person in default.
The payment, once credited to the Government, constitutes a good and sufficient discharge of the third person’s liability to the defaulter to the extent of the amount covered by the receipt.
Example
Company A owes Company B ₹4 lakh.
Company B has an outstanding GST recovery of ₹3 lakh.
If the department directs Company A to pay ₹3 lakh to the Government under Section 79, Company A’s payment to the Government discharges its corresponding liability to Company B to that extent.
Personal Liability of a Third Person After Receiving Notice
Section 79 also creates an important liability where a third person ignores the notice.
If a person, after receiving a Section 79 third-party notice, continues to discharge a liability to the defaulting taxpayer, that person may become personally liable to the Government to the extent specified by Section 79.
This is why banks, customers, debtors, insurers and other third parties receiving such notices need to examine them carefully and comply with the statutory requirements.
Protection Where No Money Is Actually Due
Section 79 also provides protection to a third person where the money mentioned in the notice:
- was not actually due to the defaulter;
- was not held by that person for or on account of the defaulter; and
- was not likely to become due or be held for the defaulter.
If the person proves this to the satisfaction of the officer issuing the notice, the person is not required to pay such amount to the Government.
This is an important safeguard because a third-party recovery notice does not automatically establish that the third party actually owes money to the defaulter.
FORM GST DRC-13 and DRC-14
Rule 145 provides the procedural mechanism for recovery from a third person.
The proper officer may issue FORM GST DRC-13 directing the third person to deposit the specified amount.
After the third person makes the payment, the proper officer issues FORM GST DRC-14, which identifies the liability that has been discharged.
The basic process is:
Section 79 notice → DRC-13 → Third person makes payment → DRC-14
Section 79(1)(d): Distress and Sale of Property
Another recovery method allows the proper officer to distrain movable or immovable property belonging to or under the control of the defaulter.
The property can be detained until the amount payable is paid.
If the amount payable or the cost of distress and keeping the property remains unpaid for the statutory period after the distress, the property can be sold and the proceeds used to satisfy:
- the outstanding amount; and
- applicable costs of distress, custody and sale.
Any surplus is to be returned to the person concerned.
This is different from simply deducting money from a bank account or issuing a third-party notice.
It involves property-based recovery.
Attachment and Sale of Movable or Immovable Property
Rule 147 provides a detailed procedure for recovery through sale of movable or immovable property.
The proper officer prepares a list of property belonging to the defaulter and estimates its value based on the prevailing market price.
An order of attachment or distraint and a notice for sale may be issued in FORM GST DRC-16.
The relevant authorities may also be informed so that an encumbrance can be placed on the property.
Sale of Property
Property attached or distrained under the rules can be sold through auction, including e-auction.
The auction notice is issued in FORM GST DRC-17.
Special rules apply to:
- immovable property;
- movable property;
- negotiable instruments;
- shares in corporations; and
- property held in particular forms or by other authorities.
The detailed procedure depends on the type of property involved.
Section 79(1)(e): Recovery as Arrears of Land Revenue
The fifth mechanism allows the proper officer to prepare a certificate specifying the amount due and send it to the appropriate district revenue authority.
The amount can then be recovered as if it were an arrear of land revenue.
Rule 155 provides that the certificate is sent to the Collector, Deputy Commissioner of the district or another authorised officer in FORM GST DRC-18.
Why Is This Mechanism Important?
Land-revenue recovery machinery can provide another route for recovering Government dues where ordinary payment has not been made.
It is therefore one of the more formal recovery mechanisms available under Section 79.
Section 79(1)(f): Recovery Through a Magistrate
The sixth recovery method allows the proper officer to make an application to the appropriate Magistrate.
The Magistrate can proceed to recover the amount as if it were a fine imposed by the Magistrate, notwithstanding anything contained in the Code of Criminal Procedure, 1973.
Rule 156 provides that the proper officer makes the application in FORM GST DRC-19.
This is another statutory route for recovery where the amount remains payable.
Summary of the Six Recovery Modes
| Section 79(1) | Recovery method | Basic idea |
|---|---|---|
| (a) | Deduction from money owed | Government deducts amount from money under Government control |
| (b) | Detention and sale of goods | Goods under proper officer’s control may be sold |
| (c) | Recovery from third person | Person owing money to defaulter pays Government |
| (d) | Distress and sale of property | Movable/immovable property may be distrained and sold |
| (e) | Land revenue authority | Amount recovered as arrears of land revenue |
| (f) | Magistrate | Amount recovered as if it were a fine |
The law allows the proper officer to use one or more of these modes.
Section 79(2): Recovery Under a Bond or Other Instrument
Section 79(2) deals with amounts payable under a bond or other instrument executed under the CGST Act or the rules or regulations made under it.
Where the terms of such a bond or instrument provide that an amount can be recovered using the mechanism of Section 79(1), that amount may be recovered through those mechanisms without prejudice to other available modes of recovery.
This means that the existence of a contractual or statutory bond does not necessarily restrict the Government to only one recovery route.
Section 79(3): Recovery by State or Union Territory Tax Officer
Section 79 also recognises coordinated recovery between Central and State/Union Territory tax administrations.
Where tax, interest or penalty remains unpaid, the proper officer of State tax or Union territory tax, during recovery of the tax arrears, may recover the amount from the person as if it were an arrear of State tax or Union territory tax and credit the amount recovered to the Government.
This provision is important because GST administration involves multiple tax components and corresponding government accounts.
Section 79(4): Apportionment Between Governments
Section 79(4) provides for apportionment where an amount recovered under Section 79(3) is less than the total amount due to the Central Government and State Government.
In such a case, the amount credited to the respective Governments is to be distributed in proportion to the amount due to each Government.
Example
Suppose the total amount due is:
- Central Government: ₹60,000
- State Government: ₹40,000
Total = ₹1,00,000.
If only ₹50,000 is recovered under the relevant mechanism, the recovered amount is apportioned proportionately between the two Governments.
The ratio is:
60 : 40
Therefore:
- Central Government = ₹30,000
- State Government = ₹20,000.
Section 79 and Self-Assessed Tax Under Section 75(12)
Section 79 is also relevant to unpaid self-assessed tax.
Section 75(12) provides that, notwithstanding Sections 73 and 74, where an amount of self-assessed tax in accordance with a return furnished under Section 39 remains wholly or partly unpaid, or interest payable on that tax remains unpaid, it is recoverable under Section 79. The Explanation added with effect from 1 January 2022 clarifies that “self-assessed tax” includes tax payable in respect of outward supplies furnished under Section 37 but not included in the Section 39 return.
This is important because certain amounts can become recoverable without following the ordinary demand-adjudication route under Sections 73 or 74.
Recovery of Tax Reported in GSTR-1 but Not Paid in GSTR-3B
The Explanation to Section 75(12) is particularly relevant where a taxpayer reports outward supplies under Section 37 but does not include the corresponding tax liability in the return under Section 39.
CBIC’s Instruction No. 01/2022-GST explains that such amounts can become recoverable under Section 79.
This means that taxpayers should reconcile:
- GSTR-1;
- GSTR-3B;
- tax liability;
- tax payment; and
- interest.
A mismatch resulting in unpaid liability can have direct recovery consequences.
Rule 88C and Section 79
Rule 88C was introduced to address specified differences between the tax liability reported in FORM GSTR-1/IFF and the liability reported in FORM GSTR-3B.
Where the taxpayer does not satisfactorily address the difference or pay the required amount in accordance with the prescribed procedure, the amount can become recoverable under Section 79.
The GST Council’s official material records that where the differential amount remains unpaid after the Rule 88C process and no satisfactory explanation is provided, it can be recovered under Section 79.
Rule 142B and FORM GST DRC-01D
Rule 142B provides a procedure for certain amounts that have become recoverable under Section 79.
Where the applicable amount of tax or interest remains unpaid, the proper officer can electronically intimate the amount on the common portal in FORM GST DRC-01D.
The intimation directs the person in default to make payment within the period specified in the intimation. The amount is also posted in Part II of the Electronic Liability Register in FORM GST PMT-01.
Where the amount remains unpaid after the specified period, the proper officer can proceed with the prescribed recovery mechanisms.
This mechanism is particularly relevant to specified Section 75(12)/Rule 88C recovery situations.
Section 79 and DRC Forms
Several GST forms are associated with different recovery mechanisms.
| Form | Broad purpose |
|---|---|
| DRC-09 | Deduction from money owed |
| DRC-10 | Auction notice for goods |
| DRC-11 | Notice to successful bidder |
| DRC-12 | Certificate to successful bidder |
| DRC-13 | Notice to third person |
| DRC-14 | Certificate after third-person payment |
| DRC-15 | Recovery through execution of court decree |
| DRC-16 | Attachment/distraint and sale of property |
| DRC-17 | Auction notice for attached property |
| DRC-18 | Recovery through land revenue authority |
| DRC-19 | Recovery through Magistrate |
| DRC-20 | Application for extension/instalments |
| DRC-21 | Order allowing extension/instalments |
| DRC-01D | Intimation of certain amounts recoverable under Section 79 |
The exact form applicable depends on the recovery mechanism and the circumstances of the case.
Recovery by Sale of Goods: How Does It Work?
Suppose a taxpayer has an outstanding recoverable GST liability of ₹8 lakh.
The department has goods belonging to the taxpayer under its control with sufficient value to cover the liability.
Under the applicable recovery mechanism:
- The goods are inventoried.
- Their market value is estimated.
- Only the quantity required for recovery and associated administrative expenses should ordinarily be sold.
- An auction notice is issued.
- The auction is conducted.
- The successful bidder pays the amount.
- The goods are transferred to the successful bidder.
- The proceeds are appropriated according to the prescribed rules.
How Are Sale Proceeds Appropriated?
Rule 154 provides a specific order for dealing with proceeds from the sale of goods or movable or immovable property.
The proceeds are applied:
- First, toward the administrative cost of recovery.
- Next, toward the amount being recovered.
- Next, toward other amounts due from the defaulter under the GST laws.
- Any remaining balance is paid to the defaulter.
Example
Suppose property is sold for ₹12 lakh.
Recovery expenses = ₹50,000.
Amount under recovery = ₹8 lakh.
Other eligible GST dues = ₹2 lakh.
The proceeds can be appropriated in the prescribed order, and any balance remaining after those amounts is returned to the defaulter.
👉 Read More → Section 78 – Initiation of recovery proceedings
Recovery From a Bank or Financial Institution
Section 79’s third-party mechanism can be particularly relevant when money belonging to the defaulter is held by a bank or another institution.
The statutory mechanism does not simply mean that every bank account can automatically be taken without a legal process.
The proper officer must act under the applicable recovery provision and issue the appropriate notice/order.
The bank or financial institution receiving a valid notice is then required to comply with it to the extent required by the law.
Section 79 and Provisional Attachment Under Section 83
Section 79 should not be confused with Section 83.
Section 79
Deals with recovery of amounts that have become recoverable.
Section 83
Deals with provisional attachment to protect Government revenue during specified pending proceedings.
Section 83 is a protective measure and has its own conditions and time limits.
Section 79 is the recovery mechanism for amounts that are payable and remain unpaid.
Therefore:
Section 83 = protection of revenue
Section 79 = recovery of outstanding amount
Section 79 and Section 80: Instalment Facility
Section 80 allows the Commissioner, on an application by a taxable person and subject to the statutory conditions, to extend the time for payment or permit payment in monthly instalments, up to 24 instalments.
This facility does not apply to an amount due as per the liability self-assessed in a return. Interest under Section 50 applies, and if an instalment is defaulted, the entire outstanding balance can become due and recoverable without another notice.
Rule 158 provides the procedure, including FORM GST DRC-20 for the application and FORM GST DRC-21 for the order allowing further time or instalments.
Therefore, a taxpayer facing a qualifying demand should examine whether an instalment facility is available rather than simply allowing the matter to proceed into coercive recovery.
Section 79 and Section 81
Section 81 deals with transfers or charges created over property after an amount has become due.
Where a person, with the intention of defrauding Government revenue, creates a charge on or transfers property after an amount has become due, the charge or transfer can be void against the Government’s claim, subject to the statutory exceptions in Section 81.
This provision works as an additional protection for Government revenue.
It should not be confused with Section 79 itself.
Section 79 and Section 82
Section 82 provides that, subject to the Insolvency and Bankruptcy Code, 2016, amounts payable on account of tax, interest or penalty constitute a first charge on the property of the taxable person or other person liable to pay them.
Section 82 therefore concerns the priority of the Government’s claim over property, whereas Section 79 concerns the mechanisms used to recover outstanding amounts.
Section 79 and Section 84
Section 84 deals with the continuation and validation of recovery proceedings where an appeal, revision or other proceeding changes the amount of Government dues.
If the dues are enhanced, a fresh demand for the enhanced amount is served, while existing recovery proceedings concerning the original demand may continue.
If the dues are reduced, the Commissioner is required to intimate the reduction to the relevant persons and authorities, and recovery proceedings may continue in relation to the reduced amount from the stage at which they stood.
This is important where a demand changes during appellate or other proceedings.
What Happens If a GST Demand Is Reduced on Appeal?
Suppose:
- Original demand = ₹10 lakh
- Amount recovered/subject to recovery = ₹10 lakh
- Appellate authority reduces demand to ₹6 lakh.
Section 84 contains provisions dealing with the continuation and adjustment of recovery proceedings following such reduction.
The department is not required to issue an entirely fresh demand notice merely because the amount has been reduced. Instead, the prescribed procedure under Section 84 applies.
Recovery During Appeal Proceedings
Filing an appeal and recovery are related but separate issues.
A taxpayer who receives an adverse order should examine the applicable appeal provisions immediately.
Section 107 provides the framework for first appeals, including the statutory pre-deposit requirements.
CBIC has also issued Circular No. 224/18/2024-GST addressing recovery of outstanding dues in specified situations after disposal of the first appeal and before the GST Appellate Tribunal becomes operational.
Therefore, taxpayers should not assume that simply filing an appeal automatically resolves every recovery issue.
The precise recovery position depends on:
- the stage of appeal;
- the amount admitted;
- statutory pre-deposit;
- whether the disputed amount is protected from recovery;
- any stay/order of the appellate forum; and
- the applicable CBIC instructions or circulars.
Can Multiple Recovery Modes Be Used?
Yes.
Section 79(1) expressly allows recovery through one or more of the specified modes.
Therefore, the law does not require the department to exhaust one recovery method completely before considering another.
The appropriate mechanism depends upon the circumstances, the assets available and the nature of the outstanding amount.
Recovery of a Small Amount
Section 79 does not create a general principle that small amounts are automatically exempt from recovery.
If an amount is legally payable and remains unpaid, the statutory recovery framework can apply.
However, administrative rules, instructions, thresholds or specific procedures may affect how particular categories of dues are handled.
Therefore, taxpayers should not assume that a small outstanding amount can simply be ignored.
What Should a Taxpayer Do After Receiving a Recovery Notice?
A taxpayer should act immediately after receiving a recovery communication.
A practical checklist is:
- Verify the GSTIN and legal name.
- Identify the tax period.
- Identify the provision under which the amount became recoverable.
- Check the original demand order, if applicable.
- Verify the amount of tax.
- Verify interest and penalty.
- Check whether payment has already been made.
- Reconcile the amount with the electronic liability ledger.
- Check whether an appeal has been filed.
- Check whether any stay or statutory protection applies.
- Examine the recovery method being used.
- Respond to third-party notices or other recovery communications promptly.
- If eligible, examine the Section 80 instalment facility.
- Maintain proof of all payments and communications.
What If the Taxpayer Believes the Recovery Is Incorrect?
If a taxpayer believes that recovery has been initiated incorrectly, the taxpayer should examine the underlying legal basis rather than simply ignoring the recovery notice.
Important questions include:
- Was the demand validly created?
- Was the order properly served?
- Has the payment already been made?
- Has the demand been reduced or modified?
- Has an appeal been filed?
- Has the required pre-deposit been paid?
- Is there a stay?
- Is the amount actually recoverable under Section 79?
- Is the recovery being made from the correct person?
- Is the third-party notice correctly identifying money actually due to the defaulter?
The appropriate remedy depends on the circumstances.
Practical Example of Section 79 Recovery
Suppose a registered business receives a final GST order determining:
- Tax = ₹6,00,000
- Interest = ₹90,000
- Penalty = ₹60,000
Total = ₹7,50,000.
The order is served and the applicable payment period expires without payment.
The amount then becomes subject to recovery under the applicable provisions.
The department may consider an appropriate Section 79 mechanism, such as:
Option 1: Recovery from money under Government control.
Option 2: Recovery from a third party that owes money to the business.
Option 3: Sale of goods under the department’s control.
Option 4: Attachment and sale of eligible property.
Option 5: Recovery through the revenue authority.
Option 6: Recovery through the Magistrate.
The exact mechanism depends on the circumstances and applicable procedural rules.
Practical Example of Third-Party Recovery
A company has an outstanding GST recovery of ₹20 lakh.
A customer owes the company ₹12 lakh for goods already supplied.
The proper officer issues a valid Section 79(1)(c) notice to the customer.
The customer may be required to pay the specified amount directly to the Government instead of paying it to the company.
The customer should retain the payment evidence and obtain the prescribed certificate, where applicable. Rule 145 provides for DRC-13 and DRC-14 in this process.
Practical Example of Property Recovery
Suppose a taxpayer has an outstanding recoverable amount of ₹30 lakh.
The taxpayer owns property that can legally be proceeded against under the applicable recovery provisions.
The proper officer may initiate the prescribed attachment/distraint and sale process.
Under Rule 147, the property is identified and valued, the required attachment or distraint order and sale notice are issued, and the property may be sold through auction in accordance with the prescribed procedure.
Practical Example of Recovery Through Land Revenue Authority
Suppose a recoverable GST amount remains unpaid and the department chooses the land-revenue route.
The proper officer can prepare the prescribed recovery certificate and send it to the appropriate Collector, Deputy Commissioner or authorised revenue officer.
Under Rule 155, FORM GST DRC-18 is used for this process. The amount is then recovered as an arrear of land revenue.
Important Difference Between Section 79 and Section 76
Section 76 and Section 79 should not be confused.
| Provision | Main subject |
|---|---|
| Section 76 | Tax collected from another person but not paid to Government |
| Section 79 | Recovery of amounts payable to Government that remain unpaid |
For example:
Section 76: A supplier collects ₹1 lakh as GST from customers but does not deposit it.
Section 79: A legally recoverable GST amount remains unpaid and the department uses statutory recovery mechanisms.
Section 76 creates a specific obligation regarding collected tax, while Section 79 provides the machinery for recovering amounts that remain payable.
Section 79 vs Section 78
| Point | Section 78 | Section 79 |
|---|---|---|
| Main purpose | Initiation/timing of recovery | Modes of recovery |
| Normal order-based period | Three months from service of order | Applies once amount is recoverable and unpaid |
| Early recovery | Possible under proviso with written reasons | Provides actual recovery mechanisms |
| Key question | When can recovery begin? | How can recovery be carried out? |
CBIC’s 2024 instruction specifically links these provisions and clarifies the normal three-month framework and exceptional early-recovery mechanism.
Section 79 vs Section 80
| Section | Purpose |
|---|---|
| Section 79 | Recovery of unpaid Government dues |
| Section 80 | Extension of payment time or instalments in eligible cases |
Section 80 can allow payment in monthly instalments of up to 24, subject to its statutory conditions and exclusions. If an instalment is defaulted, the outstanding balance becomes due and recoverable without another notice.
Section 79 vs Section 83
| Section | Purpose |
|---|---|
| Section 79 | Recovery of an amount that has become payable and remains unpaid |
| Section 83 | Provisional attachment to protect Government revenue during specified pending proceedings |
Section 83 is not simply another recovery method under Section 79. It is a separate protective power with its own statutory requirements.
Section 79 vs Section 82
| Section | Purpose |
|---|---|
| Section 79 | Provides mechanisms for recovering outstanding amounts |
| Section 82 | Creates a first charge on property for tax, interest and penalty, subject to the Insolvency and Bankruptcy Code |
Both provisions can be relevant to Government recovery, but they address different legal issues.
👉 Read More → Section 80 – Payment of tax and other amount in instalments
Key Compliance Lessons for Businesses
Businesses should take Section 79 seriously because recovery proceedings can directly affect cash flow, bank-related transactions, receivables, inventory and property.
Maintain Accurate GST Records
Businesses should reconcile:
- GSTR-1;
- GSTR-3B;
- electronic liability ledger;
- electronic cash ledger;
- electronic credit ledger;
- tax payments;
- demand orders; and
- notices.
Monitor the GST Portal
Businesses should regularly check GST portal communications because notices, orders and recovery-related communications can be issued electronically.
Do Not Ignore Demand Orders
A taxpayer who receives a demand order should immediately determine whether to:
- pay the amount;
- seek an eligible instalment facility;
- file an appeal;
- seek appropriate legal relief; or
- otherwise respond.
Keep Proof of Payment
Where payment has already been made, the taxpayer should maintain:
- challan;
- CIN/CPIN details where applicable;
- electronic ledger entries;
- bank statement;
- DRC forms; and
- correspondence with the department.
This documentation can become important during recovery proceedings.
Important Points to Remember About Section 79
The most important points are:
- Section 79 deals with recovery of unpaid amounts payable to the Government under the GST law.
- It is broader than recovery of tax alone and can cover specified interest, penalty and other amounts.
- Section 78 generally deals with when recovery begins after an order, while Section 79 deals with how recovery is carried out.
- Section 79(1) provides six principal recovery modes.
- Recovery can be made by deduction from money under Government control.
- Goods under the control of the proper officer can be detained and sold.
- A third person owing money to the defaulter can be required to pay the Government.
- Movable or immovable property can be proceeded against under the prescribed recovery procedure.
- Recovery can be made through a revenue authority as arrears of land revenue.
- Recovery can also be pursued through a Magistrate as if the amount were a fine.
- Section 79(2) covers amounts recoverable under bonds or other instruments.
- Section 79(3) allows specified State/UT tax officers to recover amounts during recovery of tax arrears.
- Section 79(4) provides for proportionate credit between the Central and State Governments in specified cases.
- Section 75(12) makes certain unpaid self-assessed tax and interest directly recoverable under Section 79.
- Rule 142B and FORM GST DRC-01D are relevant to specified amounts that become recoverable under Section 79.
- Rule 145 provides DRC-13 and DRC-14 for recovery from a third person.
- Rule 144 provides the procedure for sale of goods under the control of the proper officer.
- Rule 147 provides the procedure for attachment and sale of movable or immovable property.
- Rule 155 provides FORM GST DRC-18 for recovery through a land revenue authority.
- Rule 156 provides FORM GST DRC-19 for recovery through a Magistrate.
- Section 80 separately provides an instalment mechanism in eligible cases.
- Taxpayers should not ignore GST recovery communications because recovery can affect money owed by third parties, goods, property and other assets.
Conclusion
Section 79 of the CGST Act, 2017 provides the statutory machinery for recovering amounts that are payable to the Government but remain unpaid.
The section gives the proper officer several recovery options, including deduction from money under Government control, detention and sale of goods, recovery from third persons, distress and sale of property, recovery through revenue authorities and recovery through a Magistrate. The law also provides separate mechanisms for certain amounts such as unpaid self-assessed tax and interest.
Section 79 should be read together with Section 78. Section 78 generally provides the normal three-month period following service of an order before recovery proceedings begin, while Section 79 provides the actual recovery modes. CBIC has clarified that early recovery before expiry of the three-month period is an exceptional measure requiring the statutory conditions and written reasons under Section 78.
For businesses, the practical importance of Section 79 is significant. An unpaid GST liability can potentially result in recovery from receivables, goods, property or other amounts belonging to the defaulter. Businesses should therefore monitor GST demands carefully, reconcile their tax liabilities regularly, respond to notices promptly and examine available payment or appellate remedies before recovery proceedings progress.
Frequently Asked Questions About Section 79 of the CGST Act
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