Shreyansh Singh, an IIT Kanpur alumnus, has eight years of experience in the finance industry. He has spent 5 years at American Express developing mid to long-term strategies for multiple markets including US, Europe and India. Shreyansh currently leads Growth and Strategy initiatives at Pice.
15 Jul 25
6 mins
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FORM DRC 16 in GST: Notice for Attachment and Sale
DRC-16 is a formal notice issued under Section 79 for attachment of taxpayer’s assets due to unpaid GST.
It prevents the taxpayer from selling, transferring, or mortgaging the attached movable, immovable, or share-based assets.
The notice includes schedules listing detailed descriptions of the attached properties.
Non-compliance can lead to auction and forced sale of assets to recover tax dues.
Prompt settlement or legal response to DRC-16 is vital to avoid severe recovery proceedings and asset loss.
Tax compliance is an important matter in the management of any business. In India, the GST system has integrated different indirect taxes. However, there can be cases where the taxpayers, even after notices, do not clear their outstanding GST dues.
In such cases, the GST authorities have the power to recover such arrears. One such measure is the issue of FORM GST DRC-16. This notice indicates the attachment and possible sale of assets owned by a taxpayer to recover unpaid GST.
Notice for Attachment and Sale of Immovable/Movable Goods/Shares under Section 79
FORM GST DRC-16 is an official tax alert. It informs a taxpayer that they have not remitted their GST dues, which may be the basic tax, interest, penalties, or fees. Since these amounts are overdue, the authorities are now proceeding under section 79 of the GST Act.
This action is the process of "attaching" the specific assets of the taxpayer. Attachment implies that the taxpayer is no longer able to sell, transfer or create new claims (such as a loan) on these assets. Any effort to do so after the notice is null and void. The primary objective is to sell these assets in case the dues are not paid so that the money can be used to recover what is owed to the government.
Essentially, DRC-16 in GST is a serious step. The notice will clearly state the total amount due.
Various taxpayers might face a DRC-16. This could be a Monthly Taxpayer filing regular returns like GSTR-3B, or an Input Service Distributor (ISD) under Rule 65. Issues can also arise from an assessment basis subject to scrutiny, for example, under Section 63 (for unregistered persons), or problems with filings like GSTR-5 (for non-residents) or GSTR-5A (for OIDAR providers).
E-Commerce Operators also have specific GST duties. Whether one is a Compulsory taxpayer or a Voluntary taxpayer, failing to pay confirmed dues for supplies by persons having GST registration can lead to such recovery actions. Often, the initial demand might have been raised following scrutiny of returns like the GSTR-3B, which is a summary return filed by taxpayers.
If the DRC-16 notice lists a "Schedule (Movable)," it details the movable assets attached. These are items that can be moved.
Examples include:
Vehicles (cars, trucks)
Machinery
Office equipment
Stock or goods
The schedule will identify these assets.
Schedule (Immovable)
If the notice includes a "Schedule (Immovable)," it specifies attached immovable properties – things that cannot be moved.
Examples include:
Land
Buildings or flats
The schedule will provide property details like its location or survey number.
Schedule (Shares)
Tax authorities can also attach shares the taxpayer owns in companies. If so, the "Schedule (Shares)" in the DRC-16 will specify:
Company name
Number and type of shares
This stops the taxpayer from selling or transferring these shares.
Conclusion
Receiving FORM GST DRC-16 is a critical warning for taxpayers, indicating that the GST authorities are initiating asset attachment under Section 79 to recover unpaid dues. This includes movable assets, immovable property, or even company shares. Ignoring the notice can result in the loss of these assets through official sale proceedings.
Prompt action, either by settling the dues or engaging with authorities, is essential to avoid further legal and financial consequences. Businesses must treat this notice with urgency and seriousness. Knowing the implications of DRC-16 is crucial for maintaining GST compliance and safeguarding business assets from enforced recovery measures.
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FAQs
What is Form GST DRC-16 and why is it issued?
Form GST DRC-16 is a notice of attachment of assets issued by GST authorities under Section 79 of the CGST Act. It is served to taxpayers who have failed to pay their GST dues despite earlier notices. The form notifies that specific movable, immovable, or share-based assets have been attached, meaning the taxpayer cannot sell or transfer them. This step is taken to recover the outstanding tax amount.
What happens once a DRC-16 notice is issued?
Once a DRC-16 notice is served, the taxpayer loses the right to transfer or deal with the listed assets. The notice prevents selling, mortgaging, or moving these assets. If the dues remain unpaid after this notice, the GST department may proceed with auction or official sale of the assets. This makes it a serious and urgent compliance issue.
What types of assets can be listed in DRC-16?
The DRC-16 form may include: Movable assets: vehicles, machinery, inventory Immovable assets: land, buildings, flats Shares: equity held in companies Each asset type is listed in a specific schedule—Schedule (Movable), Schedule (Immovable), or Schedule (Shares). This ensures clear documentation of what has been attached.
Can DRC-16 be issued to all types of GST taxpayers?
Yes, DRC-16 can be issued to all categories of taxpayers under GST, including regular monthly filers, ISDs, non-residents (GSTR-5), OIDAR providers (GSTR-5A), and e-commerce operators. Whether registered voluntarily or compulsorily, non-payment of confirmed dues after assessments or scrutiny can trigger a DRC-16. It applies equally to unregistered persons assessed under Section 63.
How should a taxpayer respond to a DRC-16 notice
A taxpayer receiving DRC-16 should immediately review the notice and verify the listed dues and attached assets. The best course is to settle the outstanding tax liabilities to prevent sale proceedings. If disputes exist, the taxpayer may contact the jurisdictional officer or pursue legal remedies. Delaying action may result in permanent loss of business assets.
Shreyansh Singh, an IIT Kanpur alumnus, has eight years of experience in the finance industry. He has spent 5 years at American Express developing mid to long-term strategies for multiple markets including US, Europe and India. Shreyansh currently leads Growth and Strategy initiatives at Pice.
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