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Respond to a GST show-cause notice by first verifying the notice, legal section, tax period, allegations, amounts and stated deadline; then reconcile each allegation with your returns and records, prepare a point-by-point written reply, upload the prescribed documents (usually through FORM GST DRC-06 where Rule 142 applies), and preserve the acknowledgement. Do not rely only on the portal summary, assume a standard deadline, or treat an allegation as a finding.
GST demand procedure depends on the statutory route, tax period, State or Union territory rules, and the wording of the actual notice. If the deadline is close, the proposed amount is material, or fraud, wilful misstatement, suppression, input-tax credit, or erroneous-refund allegations are involved, obtain advice from a qualified GST professional while preparing the filing.
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What a GST show-cause notice means
A show-cause notice is the tax authority’s formal statement of the proposed action and the reasons relied on. It may allege tax that was not paid or was short paid, an erroneous refund, wrongly availed or utilised input-tax credit, or another compliance issue. The notice gives you an opportunity to explain the facts and law before an order is made; its allegations are not automatically established facts.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallSome notices are accompanied by an electronic summary on the GST portal. The summary helps identify the proceeding, but it is not a substitute for the detailed notice, annexures, calculations and earlier correspondence. Missing an annexure or an unclear computation should be recorded immediately and addressed through the proper channel without assuming that a clarification request extends or suspends the filing date.
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Make a notice inventory before drafting
Create one working file and record the following exactly as shown:
- GSTIN and the registered person’s legal name.
- The issuing office, officer and jurisdiction.
- Notice reference number, issue date and the date and method of service.
- Financial year and every tax period covered.
- The cited section, rules and any referenced circular, order or earlier communication.
- Each separate allegation, including the transaction or return to which it relates.
- Proposed tax, interest and penalty, with the department’s calculation and annexure reference.
- The response deadline stated in the notice and any scheduled hearing date.
- Documents listed as annexures and documents previously submitted.
Compare this inventory with the portal entry. If the portal summary and detailed notice differ, preserve screenshots or downloaded copies, identify the discrepancy in the reply, and ask the issuing authority for clarification. Keep working to the stated deadline unless current law or a written direction clearly provides otherwise.
Identify the statutory route
The section cited in the notice affects the allegations you must answer, the evidence that matters and the possible consequences. Check the exact wording and version of the law applicable to the relevant tax period rather than relying on a section number from an older template.
Section 73: issues other than fraud-related conduct
The CBIC-hosted Central Goods and Services Tax Act text uses section 73 for tax not paid or short paid, an erroneous refund, or input-tax credit wrongly availed or utilised for a reason other than fraud, wilful misstatement or suppression of facts to evade tax. A reply should therefore test the department’s factual calculation and legal basis without introducing a fraud allegation that the notice does not make.
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Section 74: fraud, wilful misstatement or suppression alleged
Section 74 addresses the corresponding tax, refund or credit issues where the notice alleges fraud, wilful misstatement or suppression of facts to evade tax. Treat those words as allegations to be answered, not as established conclusions. Address the specific conduct alleged, the documents said to prove it, and why the legal ingredients are or are not met.
Section 74A and post-2024 changes
A 2025 Uttar Pradesh rules notification references amendments adding section 74A into Rule 142 with effect from 1 November 2024. That is a jurisdiction-specific signal that the post-2024 framework must be checked carefully; it does not establish the exact rule for every State or Union territory. Confirm the current Central Act and Rules, the applicable State or Union territory enactment and rules, and the statutory text named in your notice.
Understand the Rule 142 and DRC form sequence
Where Rule 142 applies, the electronic forms identify the procedural stage. The current portal and amended Rules control if they differ from an older form or consolidated publication.
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|---|---|---|
DRC-01 |
Electronic summary associated with specified notices. | Use it to locate the proceeding, then read the complete notice and annexures. |
DRC-02 |
Electronic summary associated with specified statements. | Check the underlying statement and the facts it is said to establish. |
DRC-03 |
Payment-related procedure in the Rule 142 sequence. | Consider payment only after checking the legal and factual position; do not assume a payment ends the case. |
DRC-06 |
Reply to a notice whose summary is uploaded in the circumstances specified by Rule 142. | Upload the reasoned reply, supporting documents, verification and, if appropriate, a personal-hearing request. |
DRC-07 |
Electronic summary of an order. | When an order appears, check its reasoning, computation, service and available remedies immediately. |
The CBIC Chapter XVIII Rules consolidation dated 1 January 2022 is not by itself proof of the complete text in force today. Use the current official Rules and portal instructions for the filing that you are making.
Draft the reply allegation by allegation
- Build an allegation table. Give each allegation a row with four columns: the department’s proposition, your response, the supporting record and any alternative calculation. Separate tax, interest and penalty instead of answering them as one total.
- State your position clearly. Mark each point as admitted, disputed, partly admitted or requiring clarification. If a figure is accepted only after correction, state the corrected figure and show the calculation.
- Set out a short chronology. Identify the transaction, invoice or return, the relevant filing or payment date, prior correspondence and any correction already made. A dated sequence helps the officer match your explanation to the annexures.
- Explain the facts before the legal conclusion. Describe what happened, who recorded it, and how it appears in the books and returns. Then state why the cited provision does or does not apply. Avoid unsupported statements such as “the demand is illegal” without explaining the factual and statutory basis.
- Cross-reference every important assertion. Use labels such as “Annexure 3, pages 12–18” and keep the same labels in the index, file names and body of the reply.
- Address interest and penalty separately. Explain the date and amount used for any interest computation and the facts relevant to penalty. A defence to the tax principal does not automatically answer a separate penalty allegation.
- Make a precise request. Ask for the proposed demand to be dropped to the extent unsupported, for a stated correction where the arithmetic is wrong, or for a personal hearing if oral submissions would assist. Request clarification of an incomplete annexure rather than guessing what it means.
Assemble evidence that proves each factual point
Attach records that allow the officer to reproduce your figures. The right documents depend on the notice’s grounds, period and transaction type; this is a relevance test, not a universal list.
| Issue to test | Useful records, where relevant | What to demonstrate |
|---|---|---|
| Turnover or tax reported | Relevant GST returns, books, sales registers and invoice extracts. | How the department’s proposed figure reconciles, or fails to reconcile, with reported transactions. |
| Input-tax credit | Purchase invoices, credit or debit notes, purchase ledgers, reconciliations and payment evidence. | The transaction, tax amount, accounting entry and basis for the credit claimed. |
| Erroneous refund allegation | Refund application, statements, return data, supporting invoices and computation schedules. | Why the refund was calculated correctly or what amount should be corrected. |
| Mismatch or classification | Return-to-ledger reconciliation, invoice-level schedules and relevant contracts or correspondence. | The source of the mismatch and the treatment required for the particular transaction. |
| Earlier explanation | Prior replies, acknowledgements, notices, orders and portal communications. | What was already disclosed and whether the new notice overlooks an earlier submission. |
Prepare an index, use consistent file names, and keep the source records in their original form. Make sure totals agree across the reply, schedules, returns and ledgers. Redact personal or commercially sensitive information only where lawful and appropriate; excessive redaction can make evidence unusable. If an attachment is unavailable, explain why, identify where it can be obtained and provide the best corroborating record rather than silently omitting it.
File FORM GST DRC-06 when applicable
The prescribed DRC-06 form includes fields for the GSTIN and name, notice reference number and date, financial year, the reply, uploaded documents, a verification declaration and signature, and an option to request a personal hearing. Complete it against the notice, not from memory.
- Sign in to the GST portal using the taxpayer’s authorised credentials and open the notice or demand worklist for the correct GSTIN.
- Open the proceeding identified by the notice reference and confirm that the financial year and tax period match your working file.
- Select the reply action and complete each DRC-06 field, including the notice reference, date and taxpayer details.
- Upload the signed or otherwise accepted reply file and the indexed supporting documents in the formats and size limits shown by the current portal.
- Choose the personal-hearing option deliberately. Requesting one is not a guarantee that a hearing will be granted, so explain briefly in the reply why oral clarification is useful.
- Read the verification declaration, sign through the permitted method and review every attachment before submission.
- Submit, wait for the portal acknowledgement, download the filed reply and acknowledgement, and preserve the exact files submitted with the submission timestamp.
If the portal rejects a file, record the error, retain the rejected version, correct the format or size without changing the substance, and try again promptly. A technical problem is not a reason to let the stated deadline pass; use the official help or communication route and keep evidence of the attempts.
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Decide whether to clarify, contest or pay
These are different responses and should not be blended casually.
Written contest
Use a full point-by-point reply when the facts, calculation or legal provision are disputed. Attach the evidence that permits verification and state the relief sought.
Clarification or correction
Use the proper portal or officer channel to identify a missing annexure, incorrect GSTIN, duplicated invoice or arithmetic error. Explain the issue inside the filed reply as well; a separate query should not be your only record.
Payment or voluntary disclosure
A payment procedure such as DRC-03 may be available in the applicable process, but paying an amount does not universally establish that the notice is closed or resolve interest and penalty. Obtain advice on the statutory effect, the period covered and the records needed before treating payment as a settlement.
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Prepare for a personal hearing
Bring a two-page issue list tied to the allegation table, the filed reply and the indexed annexures. Identify the three facts that require oral explanation, the calculation the officer should verify, and the exact order you seek. Have the filed acknowledgement and a complete copy of every attachment available. Answer the officer’s question asked; do not introduce a new factual theory that cannot be supported by the record. After the hearing, preserve any written minutes, additional-document request or direction and respond through the prescribed channel.
What to do after filing
- Monitor the GST portal and registered contact details for acknowledgements, hearing communications, additional-document requests and orders.
- Keep a calendar of every date stated in a new communication. The filing of a reply does not itself guarantee a stay of recovery or any extension.
- If asked for more information, provide an indexed supplementary submission that identifies the original notice and explains how each new document answers a point.
- When an order or DRC-07 summary arrives, compare its reasoning and demand computation with your reply, check service and identify the available review, rectification or appeal route.
- Ask a qualified GST professional immediately about the remedy and its deadline. The applicable period depends on the order, statutory route, jurisdiction and current law.
Common mistakes that weaken a reply
- Replying to the portal summary while ignoring the detailed notice or annexures.
- Using a deadline copied from another taxpayer, financial year or State.
- Submitting a narrative with no allegation-to-document cross-reference.
- Accepting the department’s total without rebuilding it from invoices, returns, books and ledgers.
- Calling an allegation of fraud a proven fact, or denying it without addressing the conduct alleged.
- Uploading duplicate, unreadable or inconsistently named files.
- Requesting a hearing but failing to explain the issues that require oral clarification.
- Assuming that a clarification request, payment or reply automatically pauses recovery or closes the proceeding.
- Failing to download the acknowledgement and the exact filed version.
Choose the response path using the notice, not preference
| Decision point | Question to answer | Practical consequence |
|---|---|---|
| Statutory route | Which section and allegation are actually cited? | Frame facts, evidence and legal arguments around that provision; do not import a defence from a different route. |
| Tax period and version | Which financial year and law were in force? | Check the Central and applicable State or Union territory text for that period. |
| Response type | Is the issue a factual mismatch, a legal dispute, a missing document or an amount you may lawfully pay? | Use a contest, clarification, correction or payment analysis as appropriate, with the choice explained in the record. |
| Evidence | What document proves each disputed fact and calculation? | Attach an indexed schedule rather than a bulk upload with no explanation. |
| Hearing | Would oral explanation resolve a material issue? | Request it in DRC-06 where applicable and prepare a focused issue list. |
| Urgency and remedy | What date and consequence appear in the latest communication? | File on time, preserve proof and obtain prompt advice if an order or recovery action follows. |
Keep a defensible record
Store the original notice, portal summary, annexures, screenshots, working calculations, source records, signed reply, uploaded files, acknowledgement, hearing communications and later orders in a read-only case folder. Use a naming convention such as 01_Notice, 02_Reply and 03_Annexures, with dates in year-month-day order. Restrict access because GST records contain tax, banking and customer information. A complete audit trail helps your professional adviser verify what was filed and protects against confusion when several periods are under review.
When professional help is especially important
Obtain specialist advice quickly where the notice alleges fraud, wilful misstatement or suppression; combines multiple financial years; proposes a large interest or penalty; challenges input-tax credit across many suppliers; relies on a new or amended provision; follows an earlier order; or arrives with a short deadline. Give the adviser the notice inventory, complete portal download, reconciliation and indexed evidence rather than only a narrative summary. A current printed CGST Act and Rules reference can help locate section 73, section 74 and Rule 142, but it must be updated for the relevant period and jurisdiction and does not replace the current official text, portal form or advice on the facts.
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Verify the law and form version
Use the current official Central Goods and Services Tax Act and Rules, the applicable State or Union territory enactment and rules, and the live GST portal instructions. The CBIC-hosted Rules consolidation dated 1 January 2022 is useful historical reference but cannot establish every later amendment. The official DRC-06 form shows the expected reply, document-upload, verification and hearing fields; compare it with the form displayed for your proceeding. A State notification, such as the Uttar Pradesh notification referencing the section 74A and Rule 142 update effective 1 November 2024, should be treated as evidence about that jurisdiction only, not as a universal rule.
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