Delhi Value Added Tax Act, 2004
Section 45 DVAT Act - Continuation of Certain Recovery Proceedings
Understand how an objection or appeal affects existing VAT recovery proceedings, when a fresh demand notice is unnecessary, and how Rule 38 and Form DVAT-26 operate.
Section 45 - Legal provision and meaning
Section 45 of the Delhi Value Added Tax Act, 2004 deals with continuation of certain recovery proceedings after an objection or appeal against an assessment or notice of demand. For this section, government dues means tax, penalty or another amount payable under the Act in respect of which an assessment or notice of demand has been served.
Opening condition
Where an assessment or notice of demand in respect of government dues is served upon a person, and that person initiates an objection or appeal against the assessment or demand, the following rules apply.
Clause (a) - Objection or appeal disallowed
If the objection or appeal is disallowed in whole or in part, recovery proceedings already taken before the objection or appeal may continue without a fresh assessment or demand notice, from the stage at which they stood immediately before the objection or appeal was made.
Clause (b) - Government dues reduced
- Clause (b)(i): The Commissioner need not serve a fresh assessment or notice of demand.
- Clause (b)(ii): The Commissioner must intimate the reduction both to the person concerned and to the person with whom recovery proceedings are pending.
- Clause (b)(iii): Recovery proceedings initiated on an earlier assessment or demand may continue for the reduced amount, from the stage at which they stood immediately before the objection or appeal was made.
Clause (c) - No invalidity merely for absence of fresh demand
Recovery proceedings do not become invalid merely because a fresh demand notice was not served after disposal of the objection or appeal, or because the government dues were enhanced or reduced in that proceeding.
Rule 38 and Form DVAT-26
Rule 38 of the Delhi Value Added Tax Rules implements Section 45. Where government dues are reduced, the Commissioner must notify the Collector in Form DVAT-26, and a copy must also be served on the person in the manner prescribed under Rule 62. Form DVAT-26 is titled Continuation of Recovery Proceedings.
Practical effect of Section 45
An objection or appeal and a later change in the assessed amount do not, by themselves, require the tax department to restart an existing recovery process. Recovery must reflect the amount that remains legally recoverable after the relevant decision. Section 45 does not, by itself, determine whether recovery is stayed during an objection or appeal; any applicable stay order and other governing provisions must be considered separately.
Position after introduction of GST
GST was introduced on 1 July 2017. The DVAT Act continues to be relevant to matters and transactions governed by that Act, including applicable non-GST goods and legacy VAT assessments, objections, demands and recovery proceedings. The governing law, saving provisions, relevant tax period and any subsequent amendments should be checked before applying Section 45 to a particular demand.
Official legislation, rules and forms
- Delhi Value Added Tax Act, 2004 - official departmental consolidated text (2014 edition)
- Delhi Value Added Tax Rules - official departmental consolidated text (2014 edition)
- Official DVAT forms, including Form DVAT-26
- Department of Trade and Taxes, Government of NCT of Delhi
The linked consolidated Act and Rules are historical editions, not a representation that every subsequent amendment is incorporated. Consult current notifications and orders on the official portal.