Section 82 – Tax to be First Charge on Property

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Section 82 of CGST Act, 2017 – Tax to be First Charge on Property

Updated on: February 2026 (as applicable till date)
Prepared by: Yours Tax Consultant

1. Objective of Section 82

Section 82 creates a statutory first charge in favour of the Government on the property of a taxable person for recovery of GST dues.

Its purpose is to give priority to Government dues over other claims, subject to certain legal exceptions.

2. Statutory Provision – Section 82

Section 82:
Notwithstanding anything to the contrary contained in any law for the time being in force, 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.

Provided that nothing contained in this section shall affect any proceedings under the Insolvency and Bankruptcy Code, 2016.

3. Meaning of “First Charge”

First charge means:

  • Government dues get priority
  • Over other unsecured creditors
  • And even over secured creditors in many cases

Once a first charge is created, other claims rank below Government dues.

4. Scope of Property Covered

The charge applies to:

  • Movable property
  • Immovable property
  • Present and future property

Property must belong to the taxable person or other person liable to pay GST.

5. “Notwithstanding Clause” – Overriding Effect

Section 82 begins with a non-obstante clause, which gives it overriding effect over other laws.

This means:

  • GST dues override general recovery laws
  • Priority over contractual charges
  • Priority over many statutory dues

6. Important Exception – Insolvency and Bankruptcy Code

The proviso to Section 82 is crucial. It states that:

  • Section 82 does not override IBC proceedings
  • IBC will prevail in case of corporate insolvency

Thus, during CIRP or liquidation:

  • GST dues are treated as operational debt
  • Priority is governed by IBC waterfall mechanism

7. Section 82 vs Bank Charges

Common conflict arises between:

  • Bank’s mortgage / hypothecation
  • Government’s GST first charge

Generally:

  • If charge is created before GST dues arise, courts may protect secured creditors
  • If GST dues arise first, Government charge may prevail

Outcome depends on facts and timing.

8. Relationship with Section 79 and Section 81

Section 82 strengthens recovery by ensuring priority of claims.

9. Judicial Principles

Courts have observed that:

  • Section 82 creates statutory charge, not automatic recovery
  • IBC has overriding effect due to express proviso
  • Priority disputes must consider timing and nature of charge

Arbitrary invocation without crystallised dues is not permitted.

10. Practical Implications

  • Important for banks and financial institutions
  • Critical in property transactions of defaulting taxpayers
  • Due diligence must include GST liability check

11. Professional Insight

Section 82 gives GST dues a powerful statutory priority, but it is not absolute. IBC proceedings and prior secured interests can limit its operation. Understanding charge timing is the key to resolving priority disputes.

Disclaimer: This article is prepared based on the CGST Act, Rules, notifications and prevailing legal position as applicable till date. Priority of charge is subject to judicial interpretation and specific factual matrix.

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