Section 81 stops a debtor taxpayer from moving assets out of reach. Transfers made after the dues arose, to defraud the Government, are void as against it; genuine buyers for value without notice are protected.
Key points
- Under section 81 of the CGST Act, 2017, where a person creates a charge on or parts with property after any amount has become due from him, with the intention of defrauding the Government revenue, the charge or transfer is void as against any claim for tax or other dues.
- The transfer is not void if made for adequate consideration, in good faith and without notice of the pending proceedings or the dues, or with the previous permission of the proper officer (proviso).
The provisions
81Transfer of property to be void in certain cases
Statutory text
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.
*Enforced w.e.f. 1st July, 2017.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Can GST dues be recovered from property sold by the taxpayer?
- Under section 81 of the CGST Act a transfer made after dues arose, with intent to defraud the revenue, is void against the Government — but not if the buyer paid adequate consideration in good faith without notice of the dues.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
The transfer is void only against the Government's claim, not between the parties. Intent to defraud must be shown; the timing of the transfer, the price and the relationship of the parties are the usual evidence. Section 81 reaches past transfers; section 83 lets the department attach property in advance.