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“Delve into the intricacies of ‘DRC-01B’ under GST, a tool or weapon? Unravel the 48th Council Meeting’s decisions, Rule 88C implications, and the active functionality on GSTN Portal. Learn about liabilities, discrepancies, and the potential impact on taxpayers. Stay informed and navigate the evolving GST landscape effectively.”

The Goods and Service Tax Network (GSTN) recently released an Advisory on June 29, 2023, regarding the online compliance related to the liability or discrepancies found in R1 – R3B (DRC-01B).

However, it is crucial to familiarize ourselves with the underlying context of this form.

48th Council Meeting

  • The 48th Council Meeting commenced with a discussion of the Recommendation put forth by the Law Committee.
  • After extensive deliberation, the Committee suggested the inclusion of a novel Rule 88C in the CGST Rules of 2017.
  • This rule aims to notify taxpayers via the portal about the disparity between their tax liabilities in FORM GSTR-1 and FORM GSTR-3B for a given tax period, particularly if the former exceeds the latter by a significant margin.
  • Moreover, the Law Committee proposed the addition of a new clause (d) in sub-rule (6) of Rule 59 within the CGST Rules of 2017.
  • This clause would empower the authorities to block the submission of GSTR-1 for subsequent tax periods until the taxpayer settles the amount specified in the notification or provides a response elucidating the reasons for any outstanding dues.
  • Further, Law Committee recommended the insertion of a new clause (d) in sub-rule (6) of Rule 59 of CGST Rules, 2017 to enable the blocking of GSTR-1 for a subsequent tax period unless the taxpayer has deposited the amount specified in the intimation or has furnished a reply explaining the reasons for any amount remaining unpaid.

Rule 88C

Consequently, Part A of Form DRC-01B will be issued if the tax payable indicated in GSTR-1 surpasses that in GSTR-3B. (Not every time, but if exceeds a certain % specified) The taxpayer is then required to do either.

  • remit the differential tax liability, along with interest as per section 50, via FORM GST DRC-03 or
  • Pay the variance in tax payable on the common portal within a span of 7 days.

Curiously, failing to respond within the stipulated period allows the authorities to recover the outstanding amount using Section 79 as the governing provision for recovery.

Functionality active on GSTN Portal

Our 2 Cents

In our analysis, we observe that the government has bestowed tax officers with yet another tool, given that the measures initiated under Rule 99 through the issuance of ASMT did not yield favorable outcomes for them.

i. Notably, Rule 59(6) of the CGST Act, 2017 was also introduced via Notification No. 26/2022 – Central Tax on the 26th of December 2022. This implies that non-responsive taxpayers may face a block on their GSTR-1 submission. We hope that the restriction and applicability of the rule of for prospective periods only.

ii. The Intent of Rule 88C is from Section 79, which states that liability is shown in GSTR-1 (S.37) but not in GSTR-3B (S.39) such self-assessed tax can be recovered through Section 79 {88C(3)}. The rule provides an alternate resolution to address discrepancies highlighted in return mismatch notices dispatched through ASMT-10 (Rule 99), which are followed by proceedings under Section 73/74. Thus, it would be prudent to say that Rule 88C appears to bypass Section 73/74 proceedings. Could it be considered a more optimal course of action to address the disparities arising from the reconciliation of GSTR-1 and GSTR-3B? We have observed instances where officials have adopted stringent positions, leading to unwarranted requisitions, even for minor concerns.

iii. Now, the procedure does not straight away direct recover the amount but provides an opportunity to submit a response in Part -B of DRC-01B. But with a mere 7-day window stipulated, the initiation of Section 79 seems imminent. If the government intends to automate error detection and preempt the need for ASMTs, then why such a brief and stringent provision? Will recoveries initiated under Rule 88C withstand judicial scrutiny?

Considering the language of the rule, it is advisable to file returns with utmost diligence. In case any discrepancies exist, it is prudent to prepare a reconciliation to address the same. While the rule specifies that DRC-01B will only be issued in the event of a difference exceeding the “Specified %” threshold, it is better to exercise caution as prevention is superior to cure.


If there are any uncertainties or requirements for clarification, please do not hesitate to contact the author at or dial +91 9953357999.

Author Bio

Associate Member of the Institute of Chartered Accountants of India having more than 7 years of experience in Indirect Tax Advisory & Litigation. Abundant expertise over the years in GST, Customs Laws & Foreign Trade Policy-related issues. Has argued a large number of cases before Reven View Full Profile

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June 2024