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A GST demand order is an adjudicating authority’s decision that tax, interest or penalty is payable. The amount, legal basis and next deadline depend on the tax period, the section cited in the notice, the allegations made, the date and method of communication, and whether the matter is still at the show-cause stage or has reached an order.
Read the complete notice, annexures, reply, hearing record, order and portal summaries together. The electronic summary is useful for tracking, but it does not replace the underlying documents. This guide explains the main forms, the statutory appeal period stated in section 107(1) of the CGST Act, how interest and penalties are determined, payment after a notice, and the limited waiver route under section 128A. It is general information, not advice on an individual case.
What is a GST demand order?
A demand order is the formal adjudication of a GST dispute. It can determine that tax was not paid or was short-paid, that a refund was issued wrongly, or that input tax credit was wrongly availed or used. The order may also determine interest and a statutory penalty. GST demands can involve central GST, state or Union territory GST, and integrated GST, so the authority and procedural record must be identified from the documents.
The process commonly begins with a show-cause notice or, in some situations, a statement and an electronic summary. After considering the taxpayer’s response and any hearing, the proper officer passes an order. A summary of that order is uploaded electronically, normally in FORM GST DRC-07.
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Why the notice and order must be read together
Section 75 of the CGST Act sets important limits on adjudication. The order must set out the relevant facts and the basis for the decision. It cannot confirm more tax than the amount specified in the notice and cannot confirm a demand on grounds that were not stated in the notice. The notice therefore defines the allegations that the officer is expected to decide; the order shows how those allegations were accepted, rejected or quantified.
Preserve the original notice, every annexure and computation, your reply and supporting records, hearing requests and minutes, the order, portal communication or service evidence, and payment challans. Missing one of these documents can make it difficult to establish the correct deadline or challenge an amount.
Which GST demand route applies?
Do not estimate liability until you identify the statutory route named in the notice. In the returned text of the CGST Act, section 73 covers tax not paid or short-paid, erroneous refunds, or wrongly availed or utilised input tax credit for reasons other than fraud, wilful misstatement or suppression of facts. Section 74 covers comparable situations where fraud, wilful misstatement or suppression is alleged.
The current section 74A framework and its transition rules are not resolved by the material used for this article. A notice for a later tax period may therefore be governed by a different provision or transition rule than an older notice. Check the current consolidated Act, commencement notifications and any circulars that apply to the relevant period before relying on a section 73 or section 74 timeline.
| Question to compare | Why it changes the result |
|---|---|
| Which tax period and alleged payment date are involved? | Different provisions and transition rules can apply to different periods. |
| What section is cited? | The section identifies the statutory route and the available payment or penalty treatment. |
| Does the notice allege fraud, wilful misstatement or suppression? | Those allegations distinguish the section 74 route from the non-fraud route described in section 73. |
| Is this a notice, a statement, an order or an appeal? | Each stage has different forms, responses and deadlines. |
| When and how was the document communicated? | Service or communication evidence is essential to calculate a live deadline. |
| What part is admitted or disputed? | Tax, interest and penalty may need separate treatment and evidence. |
How long do you have to appeal a GST demand order?
Section 107(1) of the CGST Act states that a person aggrieved by a decision or order of an adjudicating authority may appeal to the prescribed Appellate Authority within three months from the date the decision or order is communicated. That is the statutory text returned by the Central Board of Indirect Taxes and Customs (CBIC).
“Three months” is not a personalised deadline by itself. Before calculating the last day, identify the exact order being appealed, the date and mode of communication, the tax period and governing version of the law, and whether an applicable provision affects computation, extension or condonation. Keep a screenshot or downloaded copy of the portal communication and note the time zone and date shown there.
Practical appeal checklist
- Download the complete order and DRC-07 summary from the GST portal, including annexures and the demand breakdown.
- Record the communication date and preserve evidence of how it was served.
- Read the notice, your reply and the order side by side. Mark any amount or ground in the order that was not in the notice.
- Separate the tax, interest and penalty amounts and identify what you accept and what you challenge.
- Check the current appeal form, fee and pre-deposit rules that apply to your order and authority.
- File with the prescribed Appellate Authority within the applicable period, retaining the acknowledgement and the filed documents.
The appeal rules provide for FORM GST APL-04 to communicate the Appellate Authority’s order and the final demand confirmed. Fees, pre-deposit requirements, forms and procedural instructions can change, so verify the current rules and portal labels when filing.
What are DRC-01, DRC-02, DRC-03, DRC-04, DRC-05 and DRC-07?
Rule 142 uses electronic forms to summarise different steps. A form is not a substitute for reading the notice, order, computation and annexures.
| Form | Function described in Rule 142 | What to check |
|---|---|---|
| DRC-01 | Summary of a specified show-cause notice. | Match the summary with the full notice, legal section, tax period and computation. |
| DRC-02 | Summary of a statement under the relevant section 73(3) or 74(3) procedure. | Confirm the underlying statement and the circumstances in which it was issued. |
| DRC-03 | Intimation of payment to the proper officer in specified pre-notice or other payment circumstances. | Verify the tax period, heads of payment and whether the payment is linked to the proceeding. |
| DRC-04 | Acknowledgement of a payment or intimation where the rules provide for it. | Keep the acknowledgement with the challan and bank or electronic payment record. |
| DRC-05 | Conclusion of specified proceedings where qualifying early payment is made. | Check that the statutory conditions for conclusion are actually met. |
| DRC-07 | Summary of a demand order. | Compare every figure and reason with the signed order and annexures. |
Can you pay after receiving a show-cause notice?
Payment may be possible after a notice, but the effect depends on the section, the stage of the proceeding, the amount paid and the date of payment. A taxpayer should not assume that paying the principal tax automatically settles interest or penalty, or that a DRC-03 entry by itself closes the case.
Before deciding to pay
- Reconcile the notice computation with your returns, electronic liability ledger, credit records, invoices and payment history.
- Identify whether the notice alleges fraud, wilful misstatement or suppression, because that allegation can change the statutory consequences.
- Calculate tax, interest and any applicable penalty under the current provision and notification, rather than using a generic percentage found online.
- Ask the proper officer or your adviser which payment form and reference should be used for the specific proceeding.
- Retain the challan, bank confirmation, DRC-03 submission and any DRC-04 or DRC-05 communication.
If only part of the demand is accepted, document exactly which component is paid and which remains disputed. A payment record should not be described as a settlement unless the applicable law and the officer’s communication establish that result.
How are GST interest and penalties calculated?
Interest and penalties are not one flat consequence for every GST demand. The governing section, tax period, allegation, amount of tax, date on which tax was due, date of payment and applicable notifications all matter. The older section 73 and section 74 text returned by CBIC contains different payment and penalty consequences for the two routes, but the current section 74A application and transition rules must be checked before quoting a rate, percentage or period.
Do these 3 things before closing this tab:
1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteFor a reliable estimate, build a schedule with separate columns for the disputed tax, the statutory due date, the period of delay, payments already made, interest, and each penalty component. State who calculated each figure and under which provision. Do not copy an interest rate from a prior year, a different tax period or a different type of liability.
Questions that change the amount
- Was the liability tax short-paid, an erroneous refund or wrongly availed or utilised credit?
- Was any part paid before the notice, after the notice or after the order?
- Does a notification alter the ordinary rate or provide a conditional relief?
- Does the order explain the factual basis and computation, or does it introduce a new ground?
- Is the amount a central, state or integrated GST component, and is the correct authority deciding it?
Section 75 also contains procedural protections, including a hearing where a written request is received or an adverse decision is contemplated. If the computation is unclear, request the documents and hearing required by the applicable procedure and put calculation objections in writing.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Can interest or penalty be waived?
Relief is possible only where a specific statutory or notified route applies. It is not safe to assume that an officer can waive any demand as a matter of discretion.
Section 128A route
CBIC Circular 238/32/2024-GST discusses a limited waiver of interest or penalty, or both, for covered section 73 demands under section 128A. The circular discusses applications in SPL-01 and SPL-02, including situations involving withdrawal of certain pending appeals or writ petitions and time limits linked to notifications.
This is not a general waiver for all GST demands. Check the covered tax period, whether the order is a section 73 demand, the amount and date paid, the stage of any appeal or writ, and every condition in the current notification and rules. A section 74 or section 74A matter should not be treated as eligible merely because tax has been paid.
What if the order exceeds the notice or adds a new ground?
Compare the order paragraph by paragraph with the notice and its annexures. Section 75 says the order cannot confirm an amount above the notice and cannot confirm a demand on grounds outside those specified. Record the exact paragraph, figure and legal ground that changed. Raise the objection in the available reply, hearing and appeal documents, rather than relying on an informal portal message.
Also check whether the order states the relevant facts and basis, addresses your material submissions and records the hearing position. These procedural points can affect the grounds available in an appeal, but their legal effect depends on the complete record and current case law.
A document-and-deadline workflow
- Classify the proceeding: mark the tax period, GST component, cited section and whether the document is a notice, statement, order or appellate decision.
- Secure service evidence: save the portal download, email or other communication showing when the document was communicated.
- Rebuild the computation: reconcile tax, credit, refund, interest and penalty with books, returns and payment records.
- Choose the response: decide whether to pay, reply, request a hearing, seek correction where available, or appeal. Do not assume these options are interchangeable.
- Use the right form: confirm whether DRC-03, DRC-04, DRC-05, DRC-07, APL-01 or another current form applies to the step.
- Calendar every date: include the response date, hearing date, payment date and appeal period, with an internal reminder well before each deadline.
- Escalate disputed issues: have a GST practitioner or tax lawyer review allegations, limitation, computation and pre-deposit requirements when the amount or consequences are material.
Common mistakes that make a demand harder to resolve
- Treating DRC-07 as the entire order and never downloading the signed order or annexures.
- Counting three months from the date printed on a notice instead of checking when the appealable order was communicated.
- Using a section 73 calculation for a notice that alleges fraud, wilful misstatement or suppression.
- Quoting a historical interest or penalty percentage without checking the tax period, notifications and current provision.
- Paying through DRC-03 without identifying the exact tax period and component or without keeping the acknowledgement.
- Ignoring a hearing request or failing to show why the order exceeds the notice.
- Assuming section 128A relief applies without testing the period, demand type, payment and appeal status against the notification.
When to obtain professional help
Get case-specific advice promptly when the notice alleges fraud or suppression, the amount is substantial, several tax periods are combined, input tax credit or refunds are involved, the order appears to exceed the notice, or an appeal deadline is approaching. Provide the adviser with the complete electronic and physical record, not only the DRC-07 summary. A printed CGST Act or GST rules reference can help with reading the text, but confirm that any edition includes later amendments; the operative online Act, rules and notifications control.
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