Cash ledger debit

[Kavali Ramanjeneyulu]

One taxpayer owes some amount of GST to the govt. Dept informed the Bank where the taxpayer has his account to send DD for certain amount towards recovery of due of the taxpayer. Bank sent DD for RS fifty thousand in the name of the department. If the DD is encashed by raising Challan in the name of taxpayer, it will be credited to the taxpayer Cash ledger. If the taxpayer does not debit the cash ledger, it will not be treated as recovery. How can the cash ledger be debited by the department. PL clarify sir.

[DR.MARIAPPAN GOVINDARAJAN]

The Department is to clarify the same.

AI Summary

Cash ledger debit determines whether a third party remittance extinguishes a taxpayer's GST liability; departmental procedure is required.
When a department encashes a demand draft by raising a challan in the taxpayer's name, the amount is credited to the taxpayer's cash ledger; credit alone does not constitute recovery, and the department must effect a corresponding cash ledger debit to treat the remittance as recovery of tax dues.