Sequence of discharge of tax and dues by taxable person :
Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in the following order:
(a) self-assessed tax, and other dues related to returns of previous tax periods
(b) self-assessed tax, and other dues related to return of current tax period.
(c) any other amount payable under the Act or the rules made thereunder including the demand determined under section 73 or 74 of CGST Act – section 49(8) of CGST Act.
Unless all earlier dues of tax, interest, penalty and fee are paid, the return filed will not be considered as valid return. Thus, the recipient of goods and services will not be entitled to get input tax credit.
Luckily, demands raised under sections 73 and 74 of CGST Act are not required to be adjusted before adjusting the dues. For recovery of those dues, separate provisions have been made.
Meaning of ‘tax dues’ and ‘other dues’ – The expression “tax dues” means the tax payable under this Act and does not include interest, fee and penalty – Explanation (b)(i) to section 49(9) of CGST Act.
The expression “other dues” means interest, penalty, fee or any other amount payable under the Act or the rules made thereunder- Explanation (ii) to section 49(9) of CGST Act.