DRC 03 PAAYMENT

[SANTOSH PATIL]

During Audit u/s 65, it was observed there was short payment of 9 lakh for the period 17-18, 18-19, 19-20, 20-21. Auditor has sent ADT 02 with their observation of short payment of 9 lakh. Ten lakh ITC is available in credit ledger as on date, can we pay demand raised under audit observation by DRC 03 utilising credit balance available in portal.

[Alkesh Jani]

Shri

Please refer Sl.No.06, 07 and 08 of Circular No.172/2022 dated 6th July, 2022. Also refer Sl.No.07 column No. 10 of DRC-03.

Thanks

[Padmanathan KV]

If the short payment is on account of RCM, ITC cannot be utilized. Output tax (other than RCM), can be paid using ITC.

AI Summary

Input tax credit usage: cannot discharge reverse charge demands, but may pay other output tax liabilities from credit ledger.
Payment of a demand via DRC-03 is subject to credit utilisation rules: Input Tax Credit in the electronic credit ledger may be applied to output tax liabilities except those arising under the reverse charge mechanism; demands attributable to RCM cannot be discharged using ITC. Administrative guidance and the DRC-03 form columns govern procedural compliance for such settlements.