(1) Where any amount of VAT, supplementary duty, turnover tax, interest penalty or fine remains payable by a defaulting taxpayer, the Commissioner shall initiate proceedings for recovery of such arrear taxes from such defaulter.

¹[(1A) To carry out the purposes of sub-section (1), the Commissioner shall appoint such ²[one or more] VAT officers not below the rank and status of ³[Assistant Commissioner] as Debt Recovery Officer (DRO) and the said officer shall start proceedings for realization of arrear tax as per the procedures determined in the rules.]

(2) Arrear tax shall become payable, if-

(a) the amount of arrear tax is shown as payable on a return and remains unpaid;

(b) the amount of arrear tax is shown ⁴[in the notice or certificate] of tax determination served on the taxpayer and the defaulting taxpayer fails to pay it by the last date specified in such ⁴[notice or certificate]; or

(c) an amount of arrear tax becomes payable on the disposal of any proceeding under this Act.

(3) The Commissioner ⁵[or the Debt Recovery Officer] shall, if an arrear tax becomes payable by a defaulting taxpayer under sub-section (2), send a notice to such defaulting taxpayer for recovery of such taxes.

(4) In a proceeding relating to the recovery of arrear tax, and in relation to fixing the liability and the amount of such tax, such notice ⁶[or certificate] shall be treated to be the conclusive proof.

(5) ⁷[The Commissioner or the Debt Recovery Officer] shall, in the matters of recovery of arrear tax, take the following actions, namely:-

(a) deduct, in the prescribed manner, the amount of arrear tax from the money the defaulting taxpayer may have under the control of any authority of Income Tax, Customs, VAT or Excise;

(b) direct any person or associate or financial institution or bank holding any money of the defaulting taxpayer to pay the amount by such person or bank;

(c) issue an order directing to stop the supply of any goods or any service from the business premises of the defaulting taxpayer;

(d) lock the business identification number in the ⁸[goods declaration] processing system in the Custom House to stop clearance of imported goods of the defaulting taxpayer;

(e) issue an order, in the prescribed manner, directing to freeze the bank accounts of the defaulting taxpayer;

(f) issue an order directing to seal the business premises of the defaulting taxpayer or seal such business premises within the prescribed time and in the prescribed manner;

(g) recover the arrear taxes by attaching and selling, in the prescribed manner, any of the defaulting taxpayer’s immovable property and by seizing and selling any of his movable property; or

(h) take security deposit from a guarantor of the defaulting taxpayer in such manner and on such terms as may be prescribed ⁹[;

(j) may request the concerned authorities to disconnect gas, water, and electricity from the business premises of the defaulting taxpayer until the said tax is paid in full.]

(6) In relation to the recovery of arrear taxes by a ¹⁰[Customs Commissioner], such arrear taxes shall be collected in the same way as Customs duty on imports is collected.