DRC-01D Notice Mandatory Before Interest Recovery Under GST
If you’ve received a notice for GST recovery under Section 79, check if Form DRC-01D was issued first. As per latest rules, recovery of interest on delayed GST payment now requires prior notice — giving taxpayers a chance to respond before any coercive action.
This change comes via Rule 142B, inserted under Notification No. 38/2024–CT dated 19-07-2024 by CBIC, and is a major relief for businesses facing unilateral recovery for interest dues.
What is Form DRC-01D?
Form DRC-01D is a pre-recovery notice for interest liability, introduced to ensure principles of natural justice. The department must communicate interest liability through this form before initiating recovery under Section 79 of CGST Act.
Key Highlights: New Rule 142B & DRC-01D Process
| Aspect | Details |
|---|---|
| Applicable From | 19 July 2024 |
| Legal Provision | Rule 142B of CGST Rules, 2017 |
| Form Introduced | DRC-01D |
| Purpose | Communicate interest liability before recovery |
| Recovery Provision | Section 79 of CGST Act |
| Reply Form | DRC-01E |
| Timeline to Respond | As specified in the notice (usually 7–15 days) |
| Recovery Allowed Only If | No reply or unsatisfactory reply in DRC-01E |
Why This Change Matters for Taxpayers
Earlier, GST officers were initiating recovery of interest without any prior intimation, causing panic and hardship. Now, issuance of DRC-01D is a legal prerequisite before any amount can be recovered under Section 79.
This gives taxpayers:
- A chance to verify and contest interest calculations
- Time to rectify errors or pay voluntarily
- Protection against arbitrary recovery via bank attachment, property seizure, etc.
Practical Tip from Efiletax
Always check your GST portal inbox regularly for any DRC-01D notices. If received:
- Download the notice
- Review interest computation
- Respond through Form DRC-01E within the due date
- If needed, consult a GST expert for reply drafting
Expert Angle: Why This Rule Was Needed
Multiple High Courts including the Telangana High Court (M/s Megha Engineering case) and later the Gujarat HC had criticised the automatic recovery of interest without adjudication. The new Rule 142B enforces due process and strengthens taxpayers’ rights.
FAQ on DRC-01D and Interest Recovery
Q1. Is DRC-01D applicable for tax or penalty?
No, it is specifically for interest liability recovery.
Q2. Can the department recover interest without issuing DRC-01D?
No. As per Rule 142B, DRC-01D is mandatory before invoking Section 79.
Q3. What if I miss replying to DRC-01D?
The department can proceed with recovery actions, including bank attachment.
Q4. Can I challenge the interest demand?
Yes, through DRC-01E or appeal process under Section 107.
Conclusion
Form DRC-01D is now a mandatory first step before any recovery of interest under Section 79. This amendment empowers taxpayers with a clear opportunity to respond and avoid sudden GST recovery actions.
If you’ve received such a notice or expect interest demand, reach out to Efiletax. Our experts will help you review, respond, and protect your GST rights without delay.
👉 Need help with DRC-01D or GST recovery? Contact Efiletax now
Summary
As per Rule 142B, CBIC mandates issuance of Form DRC-01D before any GST interest recovery under Section 79. This ensures due process and gives taxpayers a chance to respond via DRC-01E. Learn the process and protect your rights with Efiletax.