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A GST show-cause notice asks a business to explain why proposed tax, interest or penalty should not be imposed. A demand is the liability determined in an adjudication order. The notice starts or advances a process; it is not, by itself, the final determination.
How do a GST show-cause notice and a demand order differ?
| What to check | Show-cause notice | Adjudication order / demand |
|---|---|---|
| Stage | The officer sets out an allegation and proposed liability and asks the recipient to respond. | The officer records the decision after considering the case and the recipient’s representation. |
| What the document should tell you | The statutory basis, relevant tax period, facts alleged, proposed calculation, supporting material and response deadline. | The findings and reasons, amount determined, order date and consequences for appeal or recovery. |
| Relevant rule 142 form | DRC-01 is the electronic summary accompanying specified notices; DRC-06 is the reply form where the rule’s DRC-01 summary procedure applies. | DRC-07 is the order summary. The cited rule says it is treated as a notice for recovery. |
| Immediate focus | Check the allegation and calculation, assemble records, and submit a supported response by the applicable deadline. | Check the order’s reasoning and amount, then promptly assess appeal, payment and recovery implications under current law. |
These form descriptions follow rule 142 in the CBIC Rules compilation dated 2022. Check for later amendments before relying on a form reference in a filing.
What should a business check in the notice?
Start with the actual notice and its annexures, not just a portal summary. Identify what the officer says happened, the period involved, the legal provision invoked and how the proposed amount was calculated.
- Procedural stage: Determine whether the communication is an intimation, show-cause notice, statement, adjudication order or recovery communication. Do not assume every GST message is a demand order.
- Alleged conduct and legal basis: Check the section cited and the conduct alleged. The CBIC Act text consulted distinguishes section 73 matters involving unpaid or short-paid tax, erroneous refunds, or wrongly availed or utilised input tax credit for reasons other than the specified fraud-related grounds, from section 74 matters alleging those grounds. The text consulted is not a reliable consolidated version for every later amendment, so check the law applicable to the tax period, including section 74A and any transitional treatment, against current official legislation.
- Proposed computation: Match the tax, interest and any penalty to the officer’s stated calculation. Note disputed assumptions separately from figures the business accepts.
- Deadline and service record: Record the response deadline shown in the notice and preserve how and when the notice was served. There is no single deadline that should be assumed from a general explainer; use the notice and governing provision.
- Evidence: Reconcile the allegation against relevant returns, invoices, credit records, ledgers, payment evidence and earlier correspondence. Which records matter depends on the allegation; this is not an exhaustive list for every case.
What do DRC-01, DRC-06 and DRC-07 mean?
Rule 142 sets out forms used at different points in specified GST procedures. A form summary is not a substitute for reading the full notice or order and its attachments.
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| Form | Role described in the cited rule 142 compilation |
|---|---|
| DRC-01 | Electronic summary accompanying specified notices. |
| DRC-06 | Reply to a notice whose summary was uploaded in DRC-01. |
| DRC-07 | Summary of an order; the rule says it is treated as a notice for recovery. |
The same compilation also refers to DRC-02 for a summary of a statement under the referenced sections, DRC-01A as a possible pre-notice communication, DRC-03 for reporting payment, DRC-04 as payment acknowledgement, and DRC-05 in stated payment and conclusion circumstances. Their use depends on the applicable procedure. The compilation is dated 2022; verify subsequent amendments and the form relevant to the communication you received.
How should a business respond to a show-cause notice?
- Preserve the record. Save the complete notice, annexures, portal records and email or other service evidence. Record the service date and the exact deadline stated in the notice.
- Classify the communication. Note the issuer, statutory section, tax period, transaction or credit at issue, and whether the document is an intimation, notice, statement, order or recovery communication.
- Reconcile the figures. Compare the allegation with relevant GST returns, invoices, credit records, ledgers, payment challans and prior replies. Separate agreed amounts from factual or legal disputes.
- Prepare a point-by-point reply. Address each allegation and connect the response to supporting records. Where rule 142’s DRC-01 summary procedure applies, the cited rule identifies DRC-06 as the reply form. Keep a copy and proof of submission.
- Consider a hearing request. Section 75(4) in the CBIC Act text consulted provides for an opportunity of hearing when requested in writing by the person chargeable with tax or penalty, or when an adverse decision is contemplated. Check the current statutory text and the circumstances of the case before relying on this provision.
For a disputed, high-value or procedurally complex matter, a qualified GST practitioner, chartered accountant or tax counsel can assess the facts, applicable law and filing requirements. This article is general information, not case-specific tax advice.
What changes if an adjudication order has already been issued?
Once an order is issued, responding to the original notice is no longer a substitute for acting on the order. Read the findings and amount determined, check the order date and DRC-07 summary, and promptly verify appeal rights, limitation periods, any applicable pre-deposit and recovery consequences under current law. Do not calculate a filing deadline from a general article; get advice based on the order and current rules.
Can a business rely on the old section 128A payment date?
CBIC Circular 238/32/2024-GST describes section 128A relief for specified section 73 demands relating to FY 2017–18 through FY 2019–20 and identifies 31 March 2025 as the notified payment date. That date had passed as of 4 October 2026. Verify whether any later official change applies before treating relief as available; the date is not a general deadline for replying to a GST notice.
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