Section 79(1)(c): The Garnishee Notice and DRC-13

Section 79 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The most commercially damaging recovery mode, because it does not act on the taxpayer at all. It acts on the people the taxpayer does business with.

Section 79(1)(c)(i): the proper officer may, by a notice in writing, require any other person from whom money is due or may become due to the defaulter, or who holds or may subsequently hold money for or on account of him, to pay to the Government — either forthwith on the money becoming due or being held, or within the time specified in the notice, not being before the money becomes due or is held — so much of it as is sufficient to pay the amount due, or the whole where it is equal to or less. The notice is in FORM GST DRC-13, and a certificate in FORM GST DRC-14 is issued to the person who pays.

Who can be garnished

Anyone who owes the defaulter money or holds money for him. In practice:

• banks — account balances and deposits;
• customers — outstanding receivables;
• e-commerce operators holding collections;
• insurers — policy proceeds;
• tenants — rent due to the defaulter;
• the department itself — a sanctioned refund, though that is usually taken under mode (a).

And prospectively. The words are "from whom money is due or may become due" and "holds or may subsequently hold". So a notice can attach money that has not yet become payable — a customer receiving a DRC-13 must apply it to future invoices as well as current dues.

The seven sub-clauses

(i) The notice. As above. Note the safeguard within it: payment cannot be required before the money becomes due or is held.

(ii) Binding, without documents. Every person to whom the notice is issued shall be bound to comply; and where the notice goes to a post office, banking company or insurer, it is not necessary to produce any pass book, deposit receipt, policy or other document for an entry or endorsement to be made before payment, notwithstanding any rule, practice or requirement to the contrary.

(iii) Non-compliance makes you a defaulter. A person who fails to make the payment is deemed to be a defaulter in respect of the amount specified in the notice, and all the consequences of the Act follow — including recovery against them under the other modes.

(iv) The notice may be amended or revoked, or the time for payment extended, by the issuing officer at any time.

(v) Payment is a good discharge. A person paying in compliance is deemed to have paid under the authority of the person in default, and the payment, credited to the Government, constitutes a good and sufficient discharge of his liability to the defaulter to the extent of the receipt.

(vi) Paying the defaulter instead makes you personally liable. Any person discharging any liability to the person in default after service of the notice is personally liable to the Government to the extent of the liability discharged, or the defaulter's liability for tax, interest and penalty, whichever is less.

(vii) The defence. Where a person served proves to the satisfaction of the issuing officer that the money demanded, or any part of it, was not due to the defaulter, or that he did not hold any money for him at the time the notice was served, and is not likely to become due or be held, nothing in the section requires him to pay.

For the business that receives a DRC-13

You are not the taxpayer, and you have no interest in the dispute. But sub-clauses (iii) and (vi) put you at real risk if you handle it casually.

Do not pay the defaulter after service. Sub-clause (vi) makes that a personal liability. Freeze the payable immediately on receipt.

Establish what is actually due. As at the date of service: invoices received, goods or services accepted, credit notes, disputed amounts, retentions, amounts withheld for defective performance, and set-offs.

Answer under sub-clause (vii) where the money is not due. In writing, with the ledger, promptly. The sub-clause requires proof to the satisfaction of the issuing officer, so the reply should be documentary rather than assertive.

Where money is genuinely due, pay to the Government — and obtain the certificate in DRC-14. Sub-clause (v) makes that payment a good discharge of your liability to the supplier, so the supplier cannot later demand it again.

Tell the counterparty. Their contract may require it, and it lets them address the underlying demand.

Do not over-pay. The obligation is limited to what is due or held. A payment of more than the amount due to the defaulter is not protected by sub-clause (v).

For the taxpayer whose customers have been garnished

Move quickly. The commercial damage from customers receiving a DRC-13 is usually larger and faster than the tax itself.

1. Check whether recovery was even permissible — has three months from service of the order under s.78 expired, or was a shorter period ordered with recorded reasons?
2. File the appeal and the pre-deposit if within time; recovery of the balance is then stayed under s.107(7).
3. Apply for instalments under s.80 where the liability is accepted but cannot be paid at once. Section 80 →
4. Ask for the notice to be revoked under sub-clause (iv) once the appeal is filed or the amount is secured — the power to revoke exists precisely for this.
5. Communicate with customers with the facts and the DRC-14 position, so that the payment they make discharges them and the commercial relationship survives.
6. Track the credit — amounts paid by garnishees must appear against your demand in the electronic liability register, and should be reconciled.

The limits

It reaches only money. Not goods, not property, not performance obligations. Goods are dealt with under mode (b) or by distraint under mode (d).

Only money due to, or held for, the defaulter. Money held in a fiduciary capacity for someone else, or money due to a different entity of the same group, is not within the notice as served — though the Explanation to s.79 extends "person" to distinct persons of the same PAN, so other GST registrations of the same legal entity are within reach. Section 78 and 79 →

Only after the amount is payable. A garnishee notice presupposes an amount payable that has not been paid. Where recovery has been stayed, or the s.78 period has not expired, the notice should not have issued.

Key takeaways

• Section 79(1)(c) allows a written notice to anyone who owes the defaulter money or holds money for him, in FORM GST DRC-13.
• It reaches future amounts — "may become due", "may subsequently hold".
• Non-compliance makes the recipient a deemed defaulter; paying the defaulter after service makes them personally liable.
• Payment to the Government is a good discharge, evidenced by DRC-14.
• Sub-clause (vii) is the complete defence where the money was not due and is not likely to become due.
• The notice may be amended or revoked at any time by the issuing officer — ask for revocation once an appeal is filed.

Read next

• Section 78 and Section 79: Recovery and Its Modes
• Section 80: Instalments, DRC-20 and the Default Clause
• Provisional Attachment: Section 83 and Rule 159
• Section 79 of CGST Act 2017 — Recovery of Tax

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition).