Does Non-filing of GSTR3B invokes action u/s 79(1)(c)

The officer's gross demand via DRC-13 is procedurally invalid without DRC-01D intimation.

I would not accept the proposition that the officer can simply recover Rs. 68,440 from Shristi without qualification. The Department has a statutory recovery route against Mahavir because the GSTR-1 liability was declared and GSTR-3B was not filed. However, the quantum and the manner of invoking DRC-13 are both open to challenge, particularly if Rs. 34,782 ITC is validly available and the prescribed pre-recovery procedure was bypassed.

Mahavir should immediately file the June 2026 GSTR-3B, discharge the correctly computed net tax + interest, and simultaneously seek written withdrawal of the DRC-13 issued to Shristi. Shristi should not make a duplicate payment once Mahavir's liability is discharged, but it should retain evidence of the withdrawal/closure because section 79 places consequences on a third person who pays the defaulter after receiving a garnishee notice.

The query does not explain the complete facts of the case. Without knowing the facts, the officer's actions cannot be blamed. It is stated that after ITC is deducted, the remaining tax liability is to be recovered. However, it is not stated whether the available ITC was determined to be eligible ITC and allowed by passing an order. Whether the taxpayer has replied to the notices appropriately or not. In case an order was passed for the entire tax liability, the recovery action taken by the Officer is correct. Without passing an order, initiation of recovery action is incorrect. In case the tax liability is discharged by filing GSTR-3B, M/s Shristi is not liable to discharge. In case there is a double recovery, it is refundable either to M/s Srishti or to Mahavir, as the case may be.

Have a look at rule 37A. This is not right action by officer and is taken premature. There has also been a HC decision which states that before 9 & 9C is filed demand should not be raised.

The first defaulter is the assessee who did not file GSTR-3B return. This is a serious offence.