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CGST Act Section 81: Transfer of property to be void in certain cases | Finin2min

Section 81 - Transfer of property to be void in certain cases

Chapter XV - Demands and Recovery
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Source control: The text/status on this page is tied to the official source gateway and the Phase 1 legal-review register. Open official source.

Finin2min Summary - Section in 2 Minutes

Makes certain property transfers void against revenue where made during pending proceedings or after tax becomes payable. Adequate consideration, good faith and lack of notice can protect a transfer. Prior permission is another statutory protection.

Exact operative text

81. Transfer of property to be void in certain cases.-Where a person, after any amount has become due from him, creates a charge on or parts with the property belonging to him or in his possession by way of sale, mortgage, exchange, or any other mode of transfer whatsoever of any of his properties in favour of any other person with the intention of defrauding the Government revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the said person: Provided that, such charge or transfer shall not be void if it is made for adequate consideration, in good faith and without notice of the pendency of such proceedings under this Act or without notice of such tax or other sum payable by the said person, or with the previous permission of the proper officer.

Paragraph-wise decode

Makes certain property transfers void against revenue where made during pending proceedings or after tax becomes payable. Adequate consideration, good faith and lack of notice can protect a transfer. Prior permission is another statutory protection.

Section-Rule-Form-Notification bridge

No direct Rule certified in Phase 1. Check notifications, circulars, forms and corresponding State law.

The mapping is a legal concordance, not a round-robin related-link list. It is limited to instruments certified in this phase.

Practical example

A property sale during pending adjudication is reviewed for value, notice, related-party links and permission.

Professional alert

Transaction due diligence should include GST litigation and contingent-demand searches.

SECTION 82 Tax to be first charge on property BARE ACT - OPERATIVE TEXT 82. Tax to be first charge on property.-Notwithstanding anything to the contrary contained in any law for the time being in force, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), any amount payable by a taxable person or any other person on account of tax, interest or penalty which he is liable to pay to the Government shall be a first charge on the property of such taxable person or such person. DECODED IN SIMPLE LANGUAGE Creates a first charge for GST dues, subject to the Insolvency and Bankruptcy Code and other express statutory provisions. IBC priority can override the GST first charge. Asset-security and insolvency analysis must consider the governing special law. PRACTICAL EXAMPLE A company enters CIRP with GST arrears; claims are handled under the IBC process rather than ordinary recovery alone. SENIOR PROFESSIONAL ALERT Do not state that GST always ranks first; the statutory IBC carve-out is explicit.

SECTION 83 Provisional attachment to protect revenue in certain cases BARE ACT - OPERATIVE TEXT 83. Provisional attachment to protect revenue in certain cases.-(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section

(1A) of section 122, in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section

(1). DECODED IN SIMPLE LANGUAGE Allows provisional attachment after initiation of specified proceedings where Commissioner considers it necessary to protect revenue. Written order and property/bank-account identification are required. Attachment ceases after one year. Rule 159 provides DRC-22, objection and release mechanisms. PRACTICAL EXAMPLE A bank account is attached during section 74A proceedings; taxpayer files DRC-22A objection with working-capital and ownership evidence. SENIOR PROFESSIONAL ALERT Attachment must be necessary and proportionate, not an automatic response to every investigation.

Implementation checklist

  1. Fix the transaction, taxable period and jurisdiction.
  2. Read every subsection, proviso, explanation and omission marker.
  3. Open the mapped Rule, form, notification and circular.
  4. Test State/UT variation and portal version.
  5. Preserve evidence, approvals, working papers and acknowledgements.
  6. Record the conclusion, assumptions, source date and reviewer.

Evidence and retention checklist

Practical Q&A

What does section 81 regulate?
It regulates transfer of property to be void in certain cases. Read the exact text, conditions, exceptions and transaction date together.
Which subordinate law should be checked?
No direct CGST Rule has been certified in this phase. Notifications, circulars, forms and the corresponding SGST/UTGST layer may also apply.
What evidence should be retained?
Preserve the contract or transaction record, invoice or form, portal acknowledgement, payment/ledger evidence, correspondence, legal working and the official source version used.
Can portal behaviour override the statute?
No. Portal functionality is operational evidence; legal entitlement and liability remain controlled by the Act, Rules, notifications and binding decisions.
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