EXAMPLE

B is liable to pay Rs. 1,00,000 to A. Demand was raised for Rs. 1,20,000 by department on A. Can the following amount be recovered from B if:

(i)    Notice was issued to be B for recovery of Rs. 1,20,000

(ii)    Notice was not issued to be B

(iii)    Notice was issued to B for depositing Rs. 1,20,000 but he had only Rs. 50,000.


ANSWER

As per section 79(1)(c)(vi), B will pay to the department  which was due to A if proper notice is issued by the department to such other person and such other person holds money due to such registered person. Therefore,

(i)    B will pay Rs. 1,00,000 only to department as he owed only this much amount to A

(ii)    Since no notice was issued to B, therefore, B is not liable to pay any amount to department

(iii)    Since, B had only Rs. 50,000 with him at the time of serving of the recovery notice, therefore, B will deposit Rs. 50,000 immediately and for the remaining Rs. 50,000 he will seek extension and pay the same within extended time period.