Do not ignore a GST notice
Most GST notices today are generated from data. The department compares your GSTR-1, GSTR-3B, GSTR-2B, e-way bills and e-invoices, and writes to you when the numbers do not match. A notice is not always a sign of wrongdoing, but an unanswered notice almost always becomes a demand order.
The first step is to identify what the notice is, under which section it is issued, and the date by which you must reply. Many businesses in Gurugram come to us after the time has passed, which narrows the options. Send it to us as soon as it arrives.
Common GST notices and what they mean
| Notice | Section or rule | What it means | Your reply |
|---|---|---|---|
| REG-03 | Rule 9 | Officer needs clarification on a new registration application | REG-04, within the time given |
| ASMT-10 | Section 61 | Discrepancies found in scrutiny of your returns | ASMT-11, within the time given (normally 30 days) |
| DRC-01A | Rule 142(1A) | Intimation of tax ascertained, before a show cause notice | Part B of DRC-01A, or payment through DRC-03 |
| DRC-01 | Sections 73, 74 or 74A | Show cause notice demanding tax, interest and penalty | Written reply in DRC-06, with hearing |
| DRC-01B | Rule 88C | Tax in GSTR-1 is higher than tax paid in GSTR-3B | Part B of DRC-01B, or pay the difference |
| DRC-01C | Rule 88D | ITC in GSTR-3B is higher than ITC in GSTR-2B | Part B of DRC-01C, or reverse the excess |
| REG-17 | Section 29(2), Rule 22 | Proposal to cancel your registration | REG-18, within seven working days |
| REG-31 | Rule 21A | Intimation of suspension of registration and grounds | Reply on the portal and correct the default |
The forms and time limits above are those prescribed in the rules. The notice itself will state the date by which you must reply, and that date governs.
Mismatch intimations: DRC-01B and DRC-01C
These are system-generated and come with a short window. They are easy to fix if handled quickly, and costly if ignored, because the portal can block filing of your next GSTR-1 until you respond.
- DRC-01B arises when the tax liability declared in GSTR-1 exceeds the tax paid in GSTR-3B beyond the tolerance set by the system. Common reasons are credit notes reported in one return and not the other, amendments, or invoices reported in the wrong month.
- DRC-01C arises when ITC claimed in GSTR-3B exceeds the ITC available in GSTR-2B. Common reasons are claiming credit on bills the supplier has not uploaded, import credit claimed before the bill of entry reflects, or credit claimed in a different month.
We prepare a month-wise reconciliation, pay or reverse what is actually due, and explain the rest in Part B of the form.
Demand notices under Sections 73, 74 and 74A
Demand proceedings depend on the financial year involved.
| Point | Section 73 (up to FY 2023-24) | Section 74 (up to FY 2023-24) | Section 74A (FY 2024-25 onwards) |
|---|---|---|---|
| Nature of case | No fraud or suppression | Fraud, wilful misstatement or suppression | Both types, under one section |
| Time limit for order | 3 years from the due date of the annual return | 5 years from the due date of the annual return | Notice within 42 months of the due date of the annual return; order within 12 months of the notice, extendable by 6 months |
| Penalty, if paid before notice | Nil | 15% of tax | Nil (non-fraud) or 15% (fraud) |
| Penalty, if paid within the window after notice | Nil, within 30 days | 25% of tax, within 30 days | Nil (non-fraud) or 25% (fraud), within 60 days |
| Penalty in the final order | 10% of tax or Rs 10,000, whichever is higher | Equal to the tax | 10% or Rs 10,000 (non-fraud); equal to the tax (fraud) |
Interest under Section 50 is payable in all cases where tax is found short paid. Section 74A also provides that no notice is issued where the tax involved for a financial year is Rs 1,000 or less.
Many notices invoke the fraud provision without stating any facts showing fraud or suppression. Where that happens, we challenge the invocation itself, along with the merits.
How we prepare a GST notice reply
- Read the notice and the annexures. We identify the section, the period, each issue raised, the amount and the last date.
- Collect your records. Returns, books, purchase and sales registers, invoices, e-way bills, bank statements and contracts, as relevant to each issue.
- Reconcile. We match your books with GSTR-1, GSTR-3B and GSTR-2B for the period, so that we know which part of the demand is correct and which is not.
- Decide what to pay and what to contest. Any amount that is genuinely payable is paid through DRC-03, which reduces interest and penalty. The rest is contested.
- Draft a point-wise reply. Each issue is answered with facts, the relevant section, rule or circular and supporting documents, in clear and formal language.
- File and attend the hearing. The reply is filed on the portal within time, and we attend the personal hearing as your authorised representative, in person or by video.
- Follow up the order. If the order is in your favour, the matter is closed. If not, we review it for an appeal.
Mistakes that weaken a reply
- Filing a reply only saying “we will submit documents later”, without any facts.
- Contesting an amount that is plainly payable, which adds interest and damages credibility on the real issues.
- Missing the personal hearing or not asking for one.
- Not reconciling first, so the reply contradicts the returns on record.
- Paying through DRC-03 without linking the payment to the notice, so the officer does not give credit for it.
- Ignoring the order after the hearing, so the appeal period runs out.
After the order
If a demand order is passed against you, the summary is issued in DRC-07 and recovery can start once the appeal period is over. An appeal to the Appellate Authority under Section 107 must normally be filed within three months of the order being communicated, with the required pre-deposit, which also stays recovery of the balance. Clear errors apparent on the record can be corrected through a rectification application under Section 161. Our GST appeals and litigation service takes the matter forward from there.
Why businesses choose KSV for GST notices
- Reconciliation first. Our replies are built on a full reconciliation of your records, which is where most cases are won or lost.
- Formal drafting. Replies are written in the formal style and structure that officers expect, with every point supported.
- Representation. Kailash Vashisht, the founder, appears as authorised representative for clients before GST authorities, so the person who drafts your reply also argues it.
- Linked services. If the notice reveals a filing problem, our return filing service fixes it going forward.
We handle notices for businesses across Gurugram, including Udyog Vihar, Sohna Road, Golf Course Road and IMT Manesar, and for clients in Delhi, Uttar Pradesh, Rajasthan and Chhattisgarh. Contact us with your notice to get started.
Frequently asked questions
Where do I find the GST notice?
Notices are issued on the GST portal under Services, User Services, View Notices and Orders, and an email is sent to your registered email ID. Some notices also come by post or by hand. The date of issue on the portal usually decides when your time to reply starts, so check the portal regularly even if you have not received an email.
What happens if I do not reply to a GST notice?
The officer can decide the matter on the basis of the information available, which usually means a demand of tax with interest and penalty, or cancellation of registration in the case of a REG-17 notice. Recovery action, including attachment of bank accounts, can follow a demand order.
Can I get more time to reply?
You can request an adjournment or more time with reasons, and officers often allow it, but it is not a right. Under Section 75(5) a hearing can be adjourned at most three times. It is safer to file at least an interim reply within the original time.
Is a personal hearing compulsory?
Under Section 75(4), an opportunity of personal hearing must be given where you ask for it in writing, or where an order adverse to you is being considered. We recommend asking for a hearing in every demand case and attending it.
What is the difference between Section 73 and Section 74?
Section 73 covers short payment or wrong ITC without fraud or suppression, and Section 74 covers cases involving fraud, wilful misstatement or suppression of facts. Section 74 has a longer time limit and heavier penalty. For FY 2024-25 onwards, both are replaced by a single Section 74A with separate penalty levels for the two types of case.
Should I pay the amount mentioned in DRC-01A?
Only the part that is actually payable. If part of the amount is correct, paying it through DRC-03 before the show cause notice reduces interest and, in non-fraud cases, avoids penalty on that part. The rest should be contested with a reasoned reply in Part B of DRC-01A.
Notice aaya hai, ab kya karein?
Pehle ghabraiye mat. Send us the notice PDF on WhatsApp along with your GST login, and we will tell you what it is about, the deadline, and the documents we need, usually the same working day.
Do you handle notices for businesses outside Gurugram?
Yes. Most replies are filed online on the GST portal, and hearings are increasingly held through video conferencing. We handle notices for clients in Delhi, Haryana, Uttar Pradesh, Rajasthan and Chhattisgarh, and attend physical hearings where required.
What is your fee for a notice reply?
Our fee starts from Rs 4,999 for a simple mismatch or scrutiny reply. Demand notices under Sections 73, 74 or 74A are quoted after we read the notice, based on the number of issues, years and the reconciliation work involved.