Recovery from Third Party u/s 79(1)(c) of GST Act: Madras HC allows Petition, Orders Dept to Consider Representation [Read Order]

In a recent judgment, the Madurai bench of Madras High Court allowed the petition seeking recovery from a third party under Section 79(1)(c ) of the Goods and Services Tax Act ( GST Act ). The court ordered the department to consider the representation.

VVK Textiles filed a writ petition before the Madras High Court praying  to issue a Writ of Mandamus directing the respondent to issue notice under DRC-13 under Section 79(1)C of GST Act 2017 against the debtors of the petitioner on the basis of the petitioner's representation dated 05.10.2024.

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Justice K. Kumaresh Babu, addressing the limited scope of the prayer, directed the department to consider the petitioner’s representation regarding recovery from a third party. The court further instructed the department to pass a reasoned order on merits and in accordance with the law, within four weeks, after granting the petitioner an opportunity for a hearing.

According to Section 79(1)(C ) of GST Act, the proper officer can issue a written notice to any person who owes money to the defaulting taxpayer or is likely to hold money on their behalf, directing them to pay such amounts to the government immediately or within a specified time.

The recipient of the notice is obligated to comply. In cases involving institutions like banks, post offices, or insurers, no additional documentation (e.g., passbook, deposit receipt, or policy) is required to process the payment, overriding any contrary rules or practices.

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Rule 145 of the GST Rules governs the recovery of dues from third parties under Section 79(1)(c) of the CGST Act. According to the rule, the proper officer may issue a notice in FORM GST DRC-13 to a third person, as defined under clause (c) of sub-section (1) of Section 79, directing them to deposit the specified amount. Once the third person makes the required payment, the proper officer is obligated to issue a certificate in FORM GST DRC-14. This certificate will clearly outline the details of the liability discharged by the third party.

To Read the full text of the Order CLICK HERE

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