About GST Notice Reply

Reply to ASMT-10 ASMT-11 DRC-01A DRC-01 and Section 73/74 show-cause notices. Forms handled: ASMT-11, DRC-03, DRC-06, GSTR-3B. Legal basis: Section 61 CGST Act scrutiny and Section 73/74.

Glossary

Plain-English glossary for this service

Section 61 scrutiny

Section 61 scrutiny is the verification of a return and related particulars by the proper officer to confirm correctness. The officer informs the registered person of discrepancies through ASMT-10 and seeks explanation through ASMT-11. It is to be noted that Section 61 is not an assessment provision; adverse outcomes escalate to Section 65, 66, 73 or 74.

DRC-01

DRC-01 is the summary of the show-cause notice issued under Section 73(1) or Section 74(1) read with Rule 142(1). It accompanies the detailed narrative SCN and quantifies the proposed demand of tax, interest and penalty under each tax head.

Stay of recovery

A stay of recovery is the order that bars the department from coercive recovery of the disputed tax demand while an appeal is pending. Under Section 107(7) of the CGST Act, the stay is automatic on payment of the ten per cent pre-deposit when the first appeal is filed. No separate stay application is required at the first-appeal stage.

GSTR-9C reconciliation

GSTR-9C is the reconciliation statement under Section 44 read with Rule 80(3) certified by a chartered accountant or cost accountant, mandatory for taxpayers with aggregate turnover above ₹5 crore. The Part-V reconciliation of ITC declared in GSTR-3B with ITC as per audited books is a sensitive scrutiny target.

Section 74 SCN

A Section 74 show-cause notice covers matters where fraud, wilful misstatement or suppression of facts is alleged to have caused tax evasion. The five-year outer limit runs from when the annual return for that financial year fell due, and the penalty equals the tax demanded, with concessions at fifteen, twenty-five and fifty per cent for early payment at various stages.

Refund rejection notice

Refund rejection notice is issued in Form RFD-08 under Rule 92(3) where the proper officer is satisfied that the refund claim is not admissible. The reply is filed in Form RFD-09 within fifteen days, failing which the rejection is confirmed in Form RFD-06.

Stay of recovery

Stay of recovery is the discretionary relief granted by the Appellate Authority under Section 107(7) of the CGST Act once a first appeal is admitted on payment of the 10 percent pre-deposit, suspending recovery proceedings on the disputed balance during pendency of the appeal.

GSTR-1 vs GSTR-3B mismatch

GSTR-1 vs GSTR-3B mismatch is the difference between outward liability declared in monthly GSTR-1 and the liability discharged through GSTR-3B. It is the single most common scrutiny trigger and the basis of Rule 88C read with DRC-01C intimation; the reconciliation aligns invoice-level GSTR-1 entries with summary GSTR-3B Table 3.1 boxes.

ASMT-13

ASMT-13 is the best-judgment assessment order under Section 62 of the CGST Act, passed against a registered person who has failed to furnish GSTR-3B despite Section 46 notice. It is deemed withdrawn if the pending return is filed within thirty days of service.

Suncraft Energy decision

Suncraft Energy v Assistant Commissioner is the Calcutta High Court ruling holding that ITC cannot be denied to a bona fide recipient merely because the supplier's GSTR-3B is not filed, without first proceeding against the defaulting supplier. The decision anchors many GSTR-2A / 2B ITC defences in DRC-06 replies.

Pradeep Goyal DIN

Pradeep Goyal v Union of India is the Supreme Court ruling holding that any communication from the GST department must carry a valid Document Identification Number to be enforceable, drawing from CBIC Circular 122/41/2019-GST. ASMT-10 or DRC-01 without a DIN can be challenged as non-est.

GSTR-2B

GSTR-2B is the static auto-drafted input tax credit statement generated on the 14th of each month from GSTR-1 and IFF filings made by suppliers up to the 13th. Under Section 16(2)(aa), ITC eligibility is gated by reflection in GSTR-2B, making GSTR-2B vs GSTR-3B reconciliation the central document in any ITC scrutiny.

Statutory Basis

Operative provisions cited on this page

Every claim on this page can be traced back to a section or rule below.

CGST Section 61Anchor

Scrutiny of returns

Section 61 of the Central Goods and Services Tax Act 2017 empowers the proper officer to scrutinise a return furnished by a registered person and the related particulars to verify their correctness. Sub-section (1) provides that the officer shall inform the registered person of any discrepancies noticed and seek an explanation thereto. It is to be noted that the operative form for such communication is ASMT-10, prescribed under Rule 99. Sub-section (2) provides that where the explanation is acceptable, the matter is closed; in the absence of a satisfactory response within the time stipulated, sub-section (3) enables further action under Sections 65, 66, 67, 73 or 74.

View source

CGST Section 65

Audit by tax authorities

Section 65 enables the Commissioner or any officer authorised to undertake audit of any registered person for such period and at such frequency as may be prescribed. Sub-section (3) provides that the registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit. Sub-section (4) requires the audit to be completed within three months from the date of commencement, extendable by six months by the Commissioner on recorded reasons. The audit findings are communicated in Form ADT-02 and may trigger a Section 73 or Section 74 demand.

View source

CGST Section 66

Special audit

Section 66 empowers the proper officer, with prior approval of the Commissioner, to direct a registered person to get the records examined and audited by a chartered accountant or cost accountant nominated by the Commissioner. Sub-section (1) is invoked where the officer is of the opinion that the value declared is not correct or the credit availed is not within normal limits. The auditor must submit the report within ninety days, extendable by another ninety days. The communication of direction is in Form ADT-03 and findings in ADT-04.

View source

CGST Section 73Anchor

Determination of tax not paid or short paid otherwise than by reason of fraud

Section 73 governs determination of tax that is not paid, short paid, erroneously refunded or where input tax credit has been wrongly availed or utilised for any reason other than fraud, wilful misstatement or suppression of facts. Sub-section (1) requires the proper officer to issue a show-cause notice at least three months prior to the time limit in sub-section (10), which itself prescribes a three-year outer period reckoned from the due date for furnishing the annual return. Sub-section (5) and (8) provide concessional penalty regimes for voluntary payment before notice and within thirty days of notice respectively. It is to be noted that the operative form for the show-cause notice is DRC-01.

View source

CGST Section 74Anchor

Determination of tax involving fraud or wilful misstatement

Section 74 covers determination of tax where fraud, wilful misstatement or suppression of facts is alleged to have led to evasion. Sub-section (1) extends the limitation to five years reckoned from the date on which the annual return became due, and sub-section (10) prescribes the corresponding adjudication horizon. Penalty under sub-section (1) is equal to the tax amount, scaling down to fifteen percent under sub-section (5) for pre-notice voluntary payment, twenty-five percent under sub-section (8) for payment within thirty days of notice, and fifty percent under sub-section (11) for payment within thirty days of the demand order.

View source

CGST Section 75

General provisions relating to determination of tax

Section 75 lays down general adjudication procedure applicable to both Section 73 and Section 74 proceedings. Sub-section (4) mandates that an opportunity of personal hearing shall be granted where the registered person requests one in writing or where the proposed order is adverse to him. Sub-section (5) restricts adjournments to a maximum of three on recorded cause. Sub-section (6) requires every adjudication order to record the material facts as well as the reasoning that grounds the decision. Sub-section (7) bars the demand from exceeding what is specified in the notice. It is to be noted that sub-section (13) deems penalty already imposed under Section 73 or 74 to discharge penalty under Sections 122 and 125.

View source

CGST Section 76

Tax collected but not paid to Government

Section 76 deals with tax collected from any person but not paid to the Government. Sub-section (1) requires every such person to forthwith pay the amount collected. Sub-section (2) empowers issue of show-cause notice without the limitations of Section 73 or 74. Sub-section (3) provides that the proper officer shall determine the amount payable along with interest under Section 50 and penalty equivalent to such amount. There is no time limit under sub-section (10) — the collected-but-not-deposited liability runs as long as the amount remains undeposited.

View source

CGST Section 50

Interest on delayed payment of tax

Section 50 governs interest on belated discharge of GST liability. Sub-section (1) prescribes interest at eighteen percent per annum on the tax remaining unpaid beyond the due date. The proviso inserted with effect from 1 July 2017 (retrospectively, by the Finance Act 2022) clarifies that interest is leviable only on the cash component and not on the portion paid through electronic credit ledger, except in cases of wrongly availed and utilised credit. Sub-section (3) prescribes a separate twenty-four percent interest where input tax credit has been wrongly availed and utilised.

View source

Forms Library

Forms used in this engagement

ASMT-10Notice for Intimating Discrepancies in the Return after Scrutiny

Issued by the proper officer where discrepancies are noticed during scrutiny of returns; specifies the discrepancy and seeks explanation within thirty days

Communicated post-scrutiny; reply due in 30 days Jurisdictional Range Officer

ASMT-11Reply to the Notice Issued under ASMT-10

Registered person's reply explaining each discrepancy with reconciliations, supporting documents and admission or contest of the variance line by line

Within 30 days of service of ASMT-10 Common Portal (registered person)

ASMT-12Order of Acceptance of Reply against the Notice Issued under ASMT-10

Closure order passed by the proper officer where the ASMT-11 reply is found acceptable; concludes the scrutiny without further proceedings

Issued after consideration of ASMT-11 Jurisdictional Range Officer

ASMT-13Assessment Order under Section 62

Best-judgment assessment order passed against a non-filer of GSTR-3B; deemed withdrawn if the pending return is filed within thirty days of service

Within five years from due date of annual return Jurisdictional Range Officer

ASMT-14Show Cause Notice for Assessment under Section 63

Show-cause notice to a taxable person who has failed to obtain registration though liable; precedes a best-judgment assessment order under Section 63

Reply within 15 days of service Jurisdictional Range Officer

DRC-01AIntimation of Tax Ascertained as Payable

Pre-show-cause intimation communicating tax, interest and penalty ascertained by the proper officer; gives the taxpayer the option to pay through DRC-03 or represent in Part B before formal SCN

Reply / payment within 15 days Jurisdictional Range Officer

DRC-01Summary of Show Cause Notice

Summary of the show-cause notice issued under Section 73(1) or Section 74(1); accompanies the detailed SCN and quantifies the proposed demand of tax, interest and penalty

Issued at least 3 months before the time limit under Section 73(10) / 74(10) Jurisdictional Range Officer

DRC-01BIntimation for ITC Mismatch (GSTR-2B vs GSTR-3B)

Auto-system intimation where input tax credit availed in GSTR-3B exceeds the credit reflected in GSTR-2B by the prescribed threshold; requires reversal through DRC-03 or explanation in Part B

Reply / payment within 7 days Common Portal (system-generated)

DRC-01CIntimation for Difference in GSTR-1 and GSTR-3B Liability

Auto-system intimation where outward liability declared in GSTR-1 exceeds the liability discharged in GSTR-3B by the prescribed threshold; either DRC-03 payment or explanation is required

Reply / payment within 7 days Common Portal (system-generated)

DRC-03Intimation of Payment

Voluntary payment of tax, interest, penalty or any other amount on a pre-SCN, post-SCN or pre-deposit basis; the same form is used for pre-deposit before filing an appeal under Section 107(6)

Any time prior to or during proceedings Common Portal (taxpayer)

DRC-04Acknowledgement of Payment through DRC-03

System acknowledgement of the DRC-03 payment; confirms credit of the amount paid against the underlying ARN / case

Auto-issued on successful DRC-03 payment Common Portal (system-generated)

DRC-06Reply to the Show Cause Notice

Substantive reply to the DRC-01 show-cause notice carrying the defence, reconciliations, case-law support, denial or admission of demand and request for personal hearing under Section 75(4)

Within 30 days of service of DRC-01 Common Portal (taxpayer)

Statutory Deadlines

Compliance deadlines that matter

Miss any of these and the next consequence kicks in automatically.

Trigger event	Days	Form	Consequence
ASMT-10 scrutiny notice served under Section 61 read with Rule 99	30 days	ASMT-11	Scrutiny escalates upward — to departmental audit under Section 65, to special audit by a CA / CMA under Section 66, or directly to Section 73 / 74 demand proceedings
DRC-01A pre-show-cause intimation communicated under Rule 142(1A)	15 days	DRC-03 (payment) or Part B of DRC-01A (representation)	Proper officer proceeds to issue formal show-cause notice in DRC-01 with full penalty exposure
DRC-01 show-cause notice issued under Section 73(1)	30 days	DRC-06	Adjudication proceeds ex-parte under Section 75(4) proviso; demand confirmed without substantive defence on record
DRC-01 show-cause notice issued under Section 74(1) for fraud cases	30 days	DRC-06	Equal-to-tax penalty under Section 74(1) confirmed in DRC-07; concessional 25 percent penalty under Section 74(8) lapses
Voluntary payment before issue of show-cause notice under Section 73(5)	On due date	DRC-03	Forfeiture of nil-penalty benefit under Section 73(5); regular SCN with 10 percent penalty under Section 73(9) follows
Voluntary payment within 30 days of Section 73 SCN under Section 73(8)	30 days	DRC-03	Concessional penalty of 10 percent or ₹10,000 (Section 73(8) read with Section 73(9)) lapses; full penalty in DRC-07
Voluntary payment before SCN under Section 74(5) for fraud cases	On due date	DRC-03	Concessional 15 percent penalty under Section 74(5) lapses; formal SCN with 100 percent penalty follows
Voluntary payment within 30 days of Section 74 SCN under Section 74(8)	30 days	DRC-03	Concessional 25 percent penalty under Section 74(8) lapses; DRC-07 confirms 100 percent penalty
Voluntary payment within 30 days of DRC-07 demand order under Section 74(11)	30 days	DRC-03	Penalty reduces to 50 percent under Section 74(11); failure leaves 100 percent penalty intact for recovery
Personal hearing opportunity request under Section 75(4)	On due date	Written request through DRC-06 / portal	Adjudication proceeds without hearing; violation of natural justice ground available in Section 107 appeal

Comparison

Section 73 (Non-Fraud) vs Section 74 (Fraud)

Aspect	Section 73 (Non-Fraud)	Section 74 (Fraud)
Operative provision	Sub-section (1) of Section 73 of the CGST Act 2017 read with Rule 142 of the CGST Rules	Sub-section (1) of Section 74 of the CGST Act 2017 read with Rule 142 and the proviso framework
Mental element required	Short payment without fraud, wilful misstatement or suppression of facts	Fraud, wilful misstatement or suppression of facts to evade tax must be alleged and proved by the revenue
Limitation for issue of SCN	Two years and nine months from the due date of the relevant annual return	Four years and six months from the due date of the relevant annual return
Limitation for passing order	Three years from the due date of the relevant annual return	Five years from the due date of the relevant annual return
Pre-show-cause intimation	DRC-01A under Rule 142(1A); reply through Part B within the noted window	DRC-01A precedes the SCN in Section 74 cases equally; the recipient retains the right to respond before formal SCN
Pre-SCN payment relief	Payment of tax with interest under Section 73(5) before SCN closes proceedings with no penalty	Payment of tax, interest and a reduced penalty of fifteen per cent under Section 74(5) before SCN closes proceedings
Penalty after SCN but before order	Reduced penalty of ten per cent or ten thousand rupees, whichever higher, under the proviso to Section 73(8)	Reduced penalty of twenty-five per cent of tax under Section 74(8) within thirty days of SCN
Penalty on adjudication order	Ten per cent of tax or ten thousand rupees, whichever is higher, under Section 73(9)	Hundred per cent of tax under Section 74(9), in addition to tax and interest
Burden of proving fraud	Not applicable; the section operates on objective short payment	Lies squarely on the revenue; recorded reasons are essential and reviewable on Kranti Associates standards
Permissible defence themes	Bona fide interpretation, supplier-side default per Suncraft Energy, contemporaneous reconciliation	Absence of mens rea; downgrade to Section 73 where mental element is not proved on record
Section 107 appeal pre-deposit	Ten per cent of disputed tax leg only, per the ratio in Tvl Sri Murugan Trading and connected orders	Ten per cent of disputed tax leg; interest and penalty components are not pre-deposited
Onward escalation risk	Demand confined to civil consequences; no prosecution under Section 132 absent independent grounds	Parallel prosecution exposure under Section 132 where the threshold quantum and ingredient elements stand