Rule 40 — GAR

40. Adjustment between Governments:- In the case of transactions between two Governments, adjustment shall always be made if required by or under the provisions of the Constitution; and otherwise, in such manner and to such extent as may be mutually agreed upon by the Governments concerned. NOTE 1:- In all cases of claims for an amount not exceeding Rs. 1000 in each case, for transactions on account of supplies made or services rendered by one Government to another, no monetary claims will be resorted to. However, in respect of the following claims monetary settlement should be made irrespective of the amount:—

(i) claims relating to commercial departments/undertakings of a Government which are required to work to a financial result, for services rendered or supplies made to or by them. NOTE 2:—For transaction above the limit of Rs. 1000 and where the supplies/services are to be paid for irrespective of any monetary limit, the settlement will be made through cheques/ Bank drafts by the supplied Government. The procedure to be followed for making the monetary settlements in these cases,

(i) between the State Governments inter se and

(ii) in respect of supplies/service to a Central Government Department will be as indicated below:

(i) Between the State Governments inter se: The concerned officer of the Government in receipt of the supplies or services will present a bill at the Treasury for the cost of services or supplies alongwith the accepted invoice and a requisition for a bank draft in favour of the officer concerned in the supplying Government and remit the bank draft so obtained to the latter who will present it at the Treasury for encashment and crediting to the proper head of account.

(ii) Between a State Government and Central Government Department (including Defence, Railways, Postal and Telecommunications Departments besides Civil). The Department of the Central Government which received supplies/services will present a bill alongwith the accepted invoice to its own Accounts Officer concerned who will make the payment by cheques/bank drafts drawn in favour of the officer concerned of the supplying Government in settlement of its claims. In the reverse case of supplies/services rendered by a Central Government Department the cheques/Bank drafts received by it from the supplied Government will be presented by it to its Accounts Officer for encashment and credit to the proper head of Account. In case the departmental officer is himself in account with a branch of the bank, the cheque/draft will be remitted by him to the bank with challan showing particulars of the Head of account for credit to Government account.

NOTE 3:- The Union Territory Governments will also follow the procedure indicated above as may be applicable to them for settlement of their inter-Governmental transactions arising out of services rendered or supplies made by/to them. NOTE 4:- These instructions will not apply to payments to supplies arranged by the Department of Supply in the Ministry of Commerce for purchases made by the State Governments etc. through Directorate General of Supplies and Disposals in regard to the procedure laid down in this Ministry's letter No. F. 1 (43)-B/73. dated the 31st July, 1975 will continue to hold good. NOTE 5:- The procedure to be followed for realisation of customs duty on goods imported by the various Governments/Departments will be laid down separately by the Department of Revenue and Banking (Revenue Wing). Similarly, the procedure to be followed for settlement of claims relating to supplies made by the Medical Store Depots to various Governments/ Departments will be prescribed separately by the Department of Health in the Ministry of Health and Family Welfare. NOTE 6:- The Principles and procedure indicated in Notes 1 and 2 above will also be followed for settlement of inter Departmental transactions among Defence, Railways, Postal, Telecommunication and Central Civil Departments on account of services rendered or supplies made by one Department to another.