Recovery of GSTR-1/GSTR-3B mismatch invalid without prior DRC-01B notice & Rule 88C compliance { P.R. Productions vs. Assistant Commissioner of Central Tax [2026] 188 taxmann.com 442 (Telangana)}
Facts:
Department noticed a mismatch between the tax liability declared in the assessee’s GSTR-1 and GSTR-3B returns. Without issuing an intimation in Form GST DRC-01B as required under Rule 88C of the CGST Rules, it directly initiated recovery proceedings by issuing a garnishee notice in Form GST DRC-13 under Section 79 of the CGST Act for recovery of the alleged differential tax.
Issue:
Whether the GST department can directly recover tax arising from a GSTR-1/GSTR-3B mismatch under Section 79 by treating it as self-assessed tax, without first complying with Rule 88C and issuing Form GST DRC-01B
Held:
The Telangana High Court held that Rule 88C is mandatory. Before initiating recovery based on a mismatch between GSTR-1 and GSTR-3B, the department must first issue Form GST DRC-01B, giving the taxpayer an opportunity to either pay the differential tax or explain the discrepancy. Direct recovery proceedings without following this statutory procedure are unsustainable in law. Accordingly, the recovery action was set aside, with liberty to the department to proceed afresh in accordance with Rule 88C.
