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Respond before the deadline in the notice, not the date you hope to meet. Download the complete show-cause notice (SCN), its FORM GST DRC-01 summary and annexures; identify whether the department has proceeded under section 73 or section 74 of the Central Goods and Services Tax Act, 2017; reconcile every rupee to your records; then file a point-by-point electronic reply in FORM GST DRC-06. Pay undisputed tax and interest through the prescribed route, request a personal hearing in writing where oral explanation will help, and preserve proof of every filing.
A GST notice is a proposed demand, not automatically a final liability. The company’s response should let the adjudicating officer trace each allegation to a fact, document, legal provision and computation. The notice’s service date, statutory section, tax period and stated reply date govern your immediate actions; current law, jurisdiction, amendments and portal instructions should be checked before filing.
What a GST show-cause notice means
An SCN is the department’s formal proposal to determine tax, interest and (where applicable) a penalty. For notices whose electronic summary is uploaded in DRC-01, the taxpayer’s electronic representation is furnished in FORM GST DRC-06. A later adjudication order is summarized electronically in DRC-07.
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The notice may concern tax not paid or short paid, an erroneous refund, or input tax credit (ITC) wrongly availed or utilised. It should identify the period, proposed tax, interest, penalty and the factual and legal grounds. Treat each item as a separate issue to be accepted, corrected, or contested rather than replying with a general denial.
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First 24 hours: preserve the complete record
Portal notices can be difficult to reconstruct later. Create a read-only case folder and an event log on the day you discover the notice.
- Download the SCN, DRC-01 summary, every annexure, demand computation and any digitally signed file.
- Save the portal’s service details, including the date and method of service, and record the reply deadline exactly as displayed.
- Note the GSTIN, issuing authority and officer, tax periods, relevant GSTINs or registrations, statutory section and every allegation.
- Collect earlier scrutiny, audit, refund, assessment, correspondence and payment records that the notice cites or that relate to the same transaction.
- Restrict editing rights on the saved files and keep a backup with the download timestamp. Preserve the original file names so the portal trail can be demonstrated.
The deadline in the live notice controls. If the portal date, the PDF date and an email differ, record all of them and obtain prompt professional advice on the legally effective service date; do not assume that the most convenient date applies.
Classify the notice: section 73 or section 74
| Issue | Section 73 | Section 74 |
|---|---|---|
| Conduct alleged | Tax not paid or short paid, erroneous refund, or wrongly availed or utilised ITC for reasons other than fraud, wilful misstatement or suppression of facts. | The same categories of liability, but the department alleges fraud, wilful misstatement or suppression of facts to evade tax. |
| What your reply must test | Whether the tax or ITC computation is correct, and whether the non-fraud classification and limitation are supportable. | Whether the underlying tax computation is correct and whether the evidence actually establishes fraud, wilful misstatement or suppression; the allegation has serious penalty and litigation consequences. |
| Payment feature highlighted in the Act | Payment of tax and interest within 30 days of service can remove the penalty and conclude proceedings for that notice, subject to the statutory conditions. | Do not assume the section 73 30-day consequence applies. Obtain advice on the section 74 payment and penalty provisions applicable to the notice. |
The section shown in DRC-01 is not conclusive merely because it appears on the form. Check the notice’s facts and stated legal basis. A notice that uses fraud language but supplies only a routine reconciliation should be answered on both the computation and the absence of the required conduct; a notice labelled section 73 should still be tested for jurisdiction and limitation.
Reconcile the department’s numbers before arguing the law
Build a working schedule that can be attached or cross-referenced in the reply. For each allegation, use a separate row and retain the underlying calculation.
| Column | What to enter |
|---|---|
| Department’s figure | Tax, interest, penalty or ITC amount exactly as shown in the SCN or annexure, with the page or paragraph reference. |
| Company’s figure | Your recomputation from returns, ledgers, invoices and payment records, stating the tax head and period. |
| Accepted amount | The amount you agree is payable, if any, separated into tax and interest. |
| Disputed amount | The balance you contest, with a short reason such as duplicate invoice, wrong period, eligible ITC or arithmetic error. |
| Evidence and legal reason | Document index numbers, return tables, contractual terms and the statutory argument supporting the variance. |
Reconcile the notice to GSTR-1 and GSTR-3B data, sales and purchase registers, tax invoices and e-invoices, e-way bills, credit and debit notes, contracts, purchase orders, bank records and payment dates. For ITC, test eligibility, receipt, tax-invoice details, supplier and payment evidence, reversals and re-availment. For exports, include the relevant LUT and shipping or export records. A computation workbook should show formulas, source files and a version date so the officer can reproduce your result.
Choose a payment, contest or mixed strategy
The best response is often mixed: pay an amount that is demonstrably due while contesting the remainder. Make the choice allegation by allegation, considering the evidence, the fraud assertion, limitation, cash flow and the consequences for a possible appeal.
| Path | When it may fit | What to document |
|---|---|---|
| Pay and close qualifying section 73 liability | The tax and interest are accepted and payment can be made within 30 days of service. | Payment calculation, challan and FORM GST DRC-03 intimation; verify the statutory conditions and seek the resulting DRC-05 conclusion where applicable. |
| Partial admission and contest | Some invoices, periods or ITC reversals are correct, but the balance is unsupported or legally wrong. | Identify the admitted items, pay the correct tax and interest through DRC-03, and state precisely which rows remain disputed in DRC-06. |
| Full contest | The demand is unsupported, barred, miscomputed or based on an allegation the evidence does not establish. | Point-by-point facts, legal grounds, limitation analysis, reconciliation and indexed evidence; request a hearing if oral explanation is useful. |
| Seek specialist advice before payment | The notice alleges fraud or suppression, involves multiple registrations or periods, or could affect an appeal or related investigation. | Obtain a written view on section, limitation, payment consequences, authority and preservation of privilege before making admissions. |
Rule 142 uses DRC-03 for payment intimation and DRC-05 for conclusion where the statutory conditions are met. CBIC Instruction 01/2022-23 also recognizes voluntary payment through DRC-03 before a notice under sections 73(5) or 74(5). Do not label a payment “full and final” unless the applicable provision and the officer’s record support that result.
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Use the notice’s paragraph and annexure numbering. A clear reply normally follows this order:
- Case identification. State the GSTIN, legal name, notice number, date, tax period, issuing officer and the form in which the reply is filed.
- Preliminary objections. Address jurisdiction, service, limitation, lack of particulars, duplicate proceedings or an incorrect statutory section where those objections are supported by the record.
- Allegation-by-allegation response. Quote or accurately summarize each allegation, then give the fact, document reference, computation and legal reason why it is admitted, corrected or denied.
- Computation. Attach the reconciliation schedule and separate tax, interest and penalty. Explain every variance from DRC-01, including rounding and period allocation.
- Payment position. Identify amounts already paid, challan or DRC-03 references, amounts offered now and amounts disputed. Do not imply that payment concedes an unrelated issue.
- Penalty response. Explain why the proposed penalty does or does not follow from the facts and the section invoked. For a section 74 notice, directly address each alleged act of fraud, wilful misstatement or suppression.
- Relief requested. Ask that unsupported proposals be dropped, admitted payments be appropriated correctly, and only a legally sustainable amount (if any) be determined.
Use a short numbered index and cross-reference every annexure in the body. Upload legible PDFs, keep file names descriptive, and check the portal’s size and format limits before the final submission. Save the acknowledgement, ARN, submission timestamp and the exact uploaded files; a screenshot alone is not a substitute for the generated acknowledgement.
Evidence bundle: what to include and how to map it
Put documents in the same sequence as the allegations. A useful index may contain:
- SCN, DRC-01 summary, annexures and portal service record.
- Return reconciliations, GSTR-1 and GSTR-3B extracts, electronic liability and credit-ledger records.
- Sales and purchase registers, tax invoices, e-invoices, e-way bills and credit or debit notes.
- Contracts, purchase orders, delivery or acceptance records and correspondence explaining the transaction.
- Bank statements, payment proofs and supplier payment evidence relevant to ITC.
- ITC eligibility workings, reversals, re-availment and supplier-related explanations.
- Export, LUT and related shipping or realization documents where exports are involved.
- Earlier replies, audit or scrutiny correspondence, orders and payment challans.
- The computation workbook with a version date and a document-to-paragraph map.
Redact personal information that is not needed, but do not remove facts that establish the transaction, consideration, tax or payment. If a document is unavailable, say why, identify the custodian and provide a credible substitute or request time in writing rather than silently omitting it.
Request a personal hearing when it can change the result
Section 75(4) states: “An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.” Make the request inside DRC-06 or in a separate written filing linked to the notice. Identify the issues that need oral explanation—such as a complex reconciliation, disputed classification, limitation calculation or an alleged admission—and list the people who will attend.
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- Other changes for 2024 have been made to continue to provide the most accurate emergency response information to help all front-line persons and all first responders stay safe during transportation emergencies.
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Keep proof that the request was made. If a hearing date is fixed, prepare a concise speaking note and a document list; oral submissions should explain, not replace, the written record. An adjournment may be sought for sufficient cause, but section 75(5) limits adjournments to three. Ask for the next date and reason in writing, and do not assume that an adjournment request automatically suspends every deadline.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Statutory dates and thresholds to check
| Provision or figure | Practical meaning |
|---|---|
| 30 days after service of a section 73 notice | Payment of tax and interest within this period can mean no penalty is payable and proceedings for that notice are deemed concluded, subject to the Act’s conditions. |
| Section 73 penalty stated in the order provision | 10% of tax or ₹10,000, whichever is higher. Confirm the version of the statute and the facts before calculating. |
| Section 73 order period | The Act states an outer period of three years measured from the relevant annual-return due date or the erroneous-refund date, as applicable. |
| Section 74 notice lead time | The Act states that a section 74 notice is to be issued at least six months before the deadline for the order. Check the exact period and any amendment for the tax year. |
| Section 75(5) | No more than three adjournments may be granted to a person during the proceedings. |
These are statutory figures, not guarantees about an outcome. A special notification, amendment, court order, tax period or the type of proceeding can affect the calculation. Have a current adviser verify limitation and any appeal deadline for the specific order.
If the reply deadline has passed
Act immediately. File the substantive DRC-06 reply if the portal still permits it, and submit a separate letter explaining the delay, enclosing the completed evidence index and requesting that it be taken on record. Preserve proof of attempted filing, portal errors, emails and any acknowledgement. If the portal blocks the filing, use the permitted jurisdictional communication channel and ask how the officer wants the reply lodged; do not rely on an unrecorded phone call.
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Review the adjudication order against the notice
When DRC-07 or the signed order arrives, compare it line by line with the SCN, DRC-06, annexures and hearing record. Section 75(7) says the amount demanded cannot exceed the amount specified in the notice and that no demand may be confirmed on grounds other than those specified in the notice.
- Check that every confirmed amount appears in the notice and that the officer addressed your material documents and objections.
- Recalculate tax, interest and penalty; verify credits for DRC-03 payments and earlier deposits.
- Check the order’s reasoning, statutory section, service details and limitation dates.
- Record the date the order was communicated and obtain current advice immediately on rectification, recovery protection and appeal deadlines.
Keep the complete case file together: notice, proof of service, reply, evidence index, acknowledgements, hearing requests and minutes, payment records and order. That record supports any later administrative or appellate step and prevents a new officer from treating an already answered allegation as unexplained.
Common mistakes that weaken a response
- Replying to the email but not filing DRC-06 against the DRC-01 notice.
- Submitting a single total without a row-by-row reconciliation.
- Paying tax without stating whether interest, penalty and the disputed balance are accepted.
- Ignoring the fraud, wilful-misstatement or suppression allegation in a section 74 notice.
- Uploading documents with no index or paragraph references.
- Requesting a hearing orally and keeping no written proof.
- Using a copied reply that cites the wrong tax period, GSTIN, officer or statutory section.
- Waiting for an order before checking limitation, service and portal acknowledgements.
Before signing, have the preparer and an independent reviewer verify the GSTIN, period, figures, payment references, annexure sequence, digital authorization and the exact relief requested.
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