Chapter XV - Demands and recovery
Section 81
Section 81: Transfer of property to be void in certain cases
Section 81 can make a property transfer void against a CGST claim where it was made after dues arose with intent to defraud revenue, subject to good-faith exceptions.
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Need advice on Section 81?
This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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.
Introduction
The provision protects recovery where a debtor shifts property after an amount becomes due to defeat the Government’s claim.
Key takeaways
Trigger and intent
After an amount becomes due, a charge or transfer by sale, mortgage, exchange or another mode with intent to defraud revenue is void against the GST claim.
Protected transactions
A transfer for adequate consideration, in good faith and without the specified notice, or with previous proper-officer permission, falls within the proviso.
Evidence
Timing, consideration, knowledge and permission records matter when the transaction is examined.
Trigger and intent
After an amount becomes due, a charge or transfer by sale, mortgage, exchange or another mode with intent to defraud revenue is void against the GST claim.
Protected transactions
A transfer for adequate consideration, in good faith and without the specified notice, or with previous proper-officer permission, falls within the proviso.
Evidence
Timing, consideration, knowledge and permission records matter when the transaction is examined.
Practical checklist
Do
- Record the date dues arose and the transfer date.
- Preserve valuation, payment and good-faith evidence.
- Seek previous permission where applicable.
Avoid
- Assume recovery or attachment is valid without checking the statutory prerequisites.
Frequently asked questions
Is every sale after GST dues arise automatically void?
No. Fraudulent intent is part of the main rule, and the proviso protects specified bona fide transactions.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026