DRC-13 — Notice to a Third Person for Recovery

DRC-13 is issued when the department directs a third person—such as a customer, bank, debtor, or any party who owes money to the taxpayer—to pay that amount directly to the government instead of the taxpayer. This method, known as “garnishee proceedings,” is used when the taxpayer fails to clear outstanding dues, and the department recovers the amount from incomes or payments due to the taxpayer.

When DRC-13 Is Issued

The form is used only after a confirmed demand remains unpaid and the department identifies persons who hold money belonging to the taxpayer.

• Issued when a customer or debtor owes money to the taxpayer.
• Applied when a bank holds balance in the taxpayer’s account.
• Used when a principal employer owes amounts to a contractor-taxpayer.
• Triggered when the taxpayer has dues but has not responded to recovery notices.

Legal Framework

DRC-13 invokes the recovery power that allows the department to intercept funds payable to the taxpayer by third parties.

• Governed by Rule 145(1) of the CGST Rules.
• Operates under Section 79(1)(c) of the CGST Act.
• Binding on the third person once issued by the Proper Officer.
• Non-compliance by the third person makes them personally liable for the amount.

Information Included in DRC-13

The form clearly instructs the third person about obligations and the amount to be paid to the government.

• Mentions GSTIN, taxpayer name, and details of outstanding demand.
• Identifies the third person (name, address, role) who holds funds payable to the taxpayer.
• Specifies the exact amount to be paid directly to the government.
• States the legal authority compelling such payment to the department.
• Warns of liability if the third person fails to comply with the direction.

Practical Importance

DRC-13 is a strong recovery tool because it directly channels receivables of the taxpayer to the department.

• Prevents the taxpayer from diverting or hiding funds.
• Enables recovery without selling assets or seizing goods.
• Creates legal obligation on customers or banks to pay dues on behalf of the taxpayer.
• Shortens the recovery process when other methods fail.

Action After Receiving DRC-13

The third person must remit the directed amount to the government and report compliance. The taxpayer should review the notice and resolve the demand to avoid ongoing redirection of receivables.