GST Demand and Recovery in Form of DRC01 to DRC08

Demand and Recovery Certificates under GST is our topic here. Presenting this article with an overview about the utilization and purposes of GST Demand and Recovery in Form of DRC01 to DRC08.

GST DEMAND AND RECOVERY – An Overview 

Grounds of Notice and order for Demand and Recovery:

As per the GST law the proper officer authorized to determine and demand the amounts based on the following grounds:

1. Tax not paid (Sec. 73 & Sec.74)*
2. Tax Short paid (Sec. 73 & Sec.74)*
3. Tax erroneously refunded (Sec. 73 & Sec.74)
4. Input Tax Credit Wrongly Availed (Sec. 73 & Sec.74)
5. Input Tax Credit Wrongly Utilized (Sec. 73 & Sec.74)
6. Tax Collected but not paid (Sec. 76)
7. Tax Collected under Wrong head (Sec.77)

[*Section 73 deals with cases where there is non-payment/under-payment of tax without any intention or invocation of fraud. Section 74 deals with cases where there is non-payment/under-payment of tax with intention or invocation of fraud.]

DRC means - Demand and Recovery Certificate:

When tax authority discovers deficiency or short fall of tax payment after the deadline for filing returns for a financial year has passed and raise the SCN or order for demand using the DRC forms called Demand and Recovery Forms.

How to view the SCN or order of demand issued?

Taxpayer can view the issued Order or SCN after login to GST portal and navigate to Services > User Services > View Additional Notices/Orders > View > Case Details.

Let’s know brief about the different type of GST Form DRC served:

GST DRC-01A [Intimation Form]

It is a pre-show cause notice intimation with reference to Section 73(1)/ (5) or Section 74(1)/ (5) to a taxpayer so that either he may deposit the amount of tax, interest and penalty or he may disagree to the ascertainment resulting in show cause notice. it is an intimation rather than a show-cause notice.

GST DRC-01A Part A [Intimation by tax officer to taxpayer]

Using this Form proper officer communicate the details of tax, interest and penalty as ascertained under sub-section (1) of section 73 or 74 of the CGST Act* to the taxpayer.

GST DRC-01A Part B [Intimation by taxpayer to tax officer]

Using this Form a taxpayer can communicate to the proper officer if he has made part-payment of the ascertained liability or if the liability is not acceptable by him.

GST DRC-01 [Show Cause Notice]

Is a form to provide a concise overview of a show cause notice to a taxpayer by the GST officer which includes specific details cause and allegations along with the tax, interest and penalty ascertained as per Section 73(1) or Section 74(1) for the specific period against the taxpayer.

GST DRC-02 [Summary of Statement]

After issuing the SCN in Form GST DRC-01 if the proper officer wants to issue details of tax unpaid or short paid for the same ground but for any other period, then he can issue a statement in form of DRC-02 w.e.f. 1st April, 2019 as notified through Notification No. 16/2019 – Central Tax, dated 29th March, 2019.

GST DRC-03 [Voluntary Tax Payment]

Is the Form for making payment of tax voluntarily towards demand or shortfall noticed by the taxpayer after expiry of the period of filing returns of a financial year.

GST DRC-04 [Acknowledgement for payment made]

An acknowledgement in favor of taxpayer issued by the tax official for the payment made against the notices/statements issued. The acknowledgement can be view and download in the Acknowledgment (GST DRC-04) tab of the Case Detail page.

GST DRC-05 [Intimation of Conclusion of Proceedings]

DRC-05 is the form issued as the closure of proceedings and the tax official have no option to issue further one more order or DRC-07 and has to maintain the time limit of three to five years as per Section 73/74.

GST DRC-06 [Filing Reply of SCN]

Form DRC-06 is to add or file reply by the taxpayer for which he unable to make payment within 30 days of the notice/SCN issued against his case.

GST DRC-07 [Demand Order]

It is an online functionality for tax officials to issue adjudication order for the recovery of GST dues from taxpayers containing the details of the demand and provides the opportunity to the taxpayer to respond or appeal against the demand.

Issuance of DRC-07 – by the Tax authorities for unpaid tax liabilities base on assessment or on interception of moving consignment or Vehicle on road for deficiency or insufficient of prescribed documents or carrying improper or expired or invalid documents.

The demand should contain valid reasons and calculation of tax, interest or penalty imposed along with mentioned nature of demand and the period.

The time limit is important to the tax authorities to ascertain the tax liability and intimate the taxpayers about their tax payable.

Copy of DRC-07 must be sent to the taxpayer’ registered email address as well in his GST portal account.

GST DRC-08 [Summary of Rectification / Withdrawal Order]

In case, the final order passed and uploaded as the summary in Form of DRC-07. The tax officer can rectify or withdraw and upload electronically as final order in Form of DRC-08 on GST portal under Section 161 of the Act.

Taxpayers can respond to the demand raised as he can furnish his explanations, submit relevant documents, or challenge the demand within one month (30 Days) if not accepted.

TO MAKE PAYMENT FOR DRC-07 [Demand Order]

Taxpayer can view the issued Order or SCN in Form of DRC-07 after login to GST portal and navigate to Services > Tax Payer details > Cash Leger > Payment towards demand.

APPEAL TO APPELLATE AUTHORITY

Taxpayer can file e-appeal to appellate authority within the stipulated period of one month (30 Days) after login to GST portal and navigate to Services > User Services > My Applications > Select application type as – Appeal to Appellate Authority > and click on New Application button.

Following are the steps to file e-Appeal to Appellate Authority:

Step-1. Creating Appeal to Appellate Authority
Step-2. Upload Annexure to GST APL-01
Step-3. Disputed Amount/ Payment Details
Step-4. Pre-deposit % of disputed tax
Step-5. Utilize Cash/ ITC
Step-6. Add any Other Supporting Document
Step-7. Preview the Application and Proceed to File
Step-8. Withdraw an Appeal Application
Step-9 Re-file an Appeal Application

DRC-07A and DRC-08A as per GST Rules and Uses:

The amount as tax, interest and penalty or other dues not recovered against demand raised under the previous tax regime viz. VAT, CST, Service Tax etc. are can be recovered as Pre-GST demand, under CGST Act, 2017.

The summary of such demand can be issued and uploaded in Form of DRC-07A by the Tax officer and would be posted in the taxpayer’s Electronic Liability Register (Part II) on the GST portal.

When a Pre-GST demand uploaded in Form GST DRC-07A is modified or rectified or if recovery is made under the present laws, then a summary of such order would be uploaded on the GST portal in Form GST DRC-08A and accordingly updated the taxpayer’s Electronic Liability Register (Part II) on the GST portal.

Thanks and Regards,

Team Tech Guide Tax
REF-A1020-24-GUIDE-020-GST-004-AP

In view to understand the actual provisions laid down under the relevant GST Rule, we would like to refer the Government official portal link to visit -

https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/rules/cgst_rules/active/chapter18/rule142_v1.00.html