DRC in excess

Hi Siva Ram Prasad,

Great question about excess payment of DRC (Demand and Recovery Challan) under GST!

Can excess DRC payment for one year be set off against another year by the GST officer?

• No, generally the GST officer cannot unilaterally adjust (set off) an excess payment of DRC for one year against the demand for another year.

• The demand/adjustment is specific to the period and invoice/transaction for which it was raised.

• Excess payment should ideally be claimed as a refund or adjusted against future liability only with the consent or application by the taxpayer.

What should be done?

1. Claim Refund:

   • File a refund application on the GST portal for the excess amount paid under DRC for a particular financial year.

   • Refund claims should be supported with proof of payment, challan details, and order demanding the amount.

2. Adjustment Against Future Liability (With Consent):

   • If you want to adjust the excess amount against future GST liability, you need to seek approval from the GST authorities.

   • This usually requires an application or representation.

3. During Notice Period:

   • If a notice for recovery or demand is issued, communicate and clarify the excess payment.

   • You can also mention the excess amount and request appropriate adjustment or refund.

Summary:

• GST officers cannot just adjust excess payments across different years without your consent.

• You should formally claim refund or request adjustment.

• Keep all documentation ready for proof.