GST Notices — Frequently Asked Questions

Not necessarily. Many GST notices are routine computer-generated communications based on data mismatches between your GSTR-1, GSTR-3B, and the GSTR-2B generated from your suppliers' filings. These are not accusations of fraud — they are requests for clarification or reconciliation.

The most important thing is to respond within the deadline specified in the notice. Ignoring a notice almost always leads to a worse outcome — the officer will proceed to issue a demand or take adverse action ex-parte (without your input). A timely, well-documented response often resolves the matter entirely.

ASMT-10 is a scrutiny notice under Section 61 of the CGST Act. It is issued when the officer detects discrepancies in your GSTR-3B returns — typically between your returns and GSTR-2B, or between turnover in GSTR-1 and GSTR-3B. You respond via ASMT-11. It is a pre-assessment communication — no demand has been raised yet.

DRC-01 is a Show Cause Notice (SCN) under Section 73 (non-fraud) or Section 74 (fraud/suppression). This is a more serious notice — the officer has already determined a tax shortfall and is now asking you why a formal demand should not be raised. The DRC-01 gives you the opportunity to either pay the tax voluntarily (with reduced penalty) or contest the demand with full legal submissions.

In practice, a DRC-01 often follows an ASMT-10 if the ASMT-11 reply was not satisfactory or if the officer moves to adjudication directly. See our detailed guides: ASMT-10 Guide and DRC-01 Guide.

This is one of the most common GST issues. GSTR-2B reflects ITC only when your supplier has filed GSTR-1. If the supplier has not filed, the credit simply does not appear in your GSTR-2B, and the officer may flag it as an ITC mismatch if you have claimed it.

Your options are:

• Follow up with the supplier to file their GSTR-1 promptly. Once they file, the ITC will appear in a subsequent GSTR-2B.
• If the supplier cannot be contacted or has shut down, you may need to reverse the ITC in GSTR-3B (with interest) and then sue the supplier for recovery under the supply agreement if warranted.
• For the ASMT-10 response, provide the reconciliation between GSTR-2B and your books, and explain the supplier's filing status with documentary evidence (tax invoice, payment proof, follow-up communications).

The Supreme Court and several High Courts have held that a bona fide recipient cannot be denied ITC merely because the supplier defaulted, provided the recipient has genuinely made the purchase and paid the tax to the supplier. This argument should be raised in your response where applicable.

The DRC-01 itself specifies the response deadline, and it must be a minimum of 30 days from the date of issuance under Sections 73 and 74 of the CGST Act. However, in practice, notices sometimes specify shorter deadlines — raise an objection if the deadline is less than 30 days.

Separately, there is a strategically important pre-SCN voluntary payment window: if you pay the tax, interest, and a reduced penalty of 25% (under Section 73) before the SCN is adjudicated, the proceedings are concluded. After the SCN is adjudicated and an order passed, the reduced penalty opportunity is lost — the standard penalty of 100% (Section 73) or 150% (Section 74) applies.

A REG-17 is a Show Cause Notice for cancellation of registration — it does not mean your registration is cancelled. It means the officer is proposing cancellation and giving you an opportunity to explain why the registration should be retained.

Common grounds for REG-17 include: non-filing of returns for 6 consecutive months (regular filers) or 3 consecutive quarters (composition dealers), business found non-existent at registered address, voluntary discontinuation, or fraud / suppression.

Respond within 7 working days of the notice. If your returns are pending, file them and pay the outstanding tax, interest, and late fees before or alongside the reply. Your response should explain the reason for non-compliance and your commitment to ongoing compliance.

See the complete REG-17 guide and reply template.

The distinction is critical and determines the penalty you face:

• Section 73 applies to cases of tax not paid, short-paid, or ITC wrongly availed — without fraud, wilful misstatement, or suppression of facts. Time limit: 3 years. Normal penalty: 10% of tax (minimum ₹10,000). Reduced to nil if paid before SCN.
• Section 74 applies where the shortfall is attributable to fraud, wilful misstatement, or suppression of facts. Time limit: 5 years. Normal penalty: 100% of tax. Reduced to 25% if paid before SCN, 50% if paid before order. The standard of proof required is significantly higher — the department must establish fraud, not merely a mismatch.

If you receive a DRC-01 invoking Section 74 and you believe the discrepancy was due to a genuine error, it is important to contest the Section 74 invocation itself in your reply — not merely explain the underlying discrepancy. If the officer cannot establish fraud, proceedings must be reclassified under Section 73.

Yes. Under Section 65 of the CGST Act, a proper officer may audit your business — at your principal place of business. The officer issues an ADT-01 notice at least 15 working days in advance. The audit must be completed within 3 months (extendable by 6 months with prior approval).

During the audit, you are required to provide: books of accounts, records, returns, invoices, bank statements, and any other documents the officer requires. You have the right to be accompanied by your CA or authorised representative throughout the proceedings.

If the audit results in a demand, the department must follow the Section 73/74 adjudication process — the audit itself is not a demand.

You can file a first appeal before the Appellate Authority (Commissioner / Joint Commissioner of Appeals) under Section 107 of the CGST Act. The deadline is 3 months from the date of the order (extendable by 1 month). File using Form GST APL-01 on the portal.

A pre-deposit of 10% of the disputed tax amount (or 20% for second appeals) is required before the appeal can be admitted. This is a mandatory condition — the Appellate Authority cannot waive this requirement.

If the order was passed ex-parte (without hearing you), you can first seek a recall of the order from the original officer before appealing, which is often faster than the appeal route.

Yes — this is a significant problem for two reasons. First, GST notices are sent to the registered address; if you have moved, you may miss critical notices and deadlines. Second, during field verification, the officer may find the business non-existent at the registered address, which is a ground for REG-17 (cancellation notice).

Update your registered address immediately through an Amendment Application (REG-14) on the GST portal. Core field changes (like principal place of business state) require approval from the jurisdictional officer; non-core changes are self-amended. Do this before you receive a notice — proactive compliance avoids complications.

If you are registered but your turnover has fallen below the threshold, you have two options: continue the registration voluntarily, or apply for voluntary cancellation (REG-16). You cannot simply ignore the registration.

If you received a notice despite having turnover below the threshold and believe you should not have been registered, or were registered by error, address this in your reply and simultaneously apply for cancellation if appropriate. Continue to file nil returns until the cancellation is processed — failure to file even after registering exposes you to late fees and potential REG-17 notices.

The GST Appellate Tribunal (GSTAT) is the second-tier appellate authority in GST proceedings — between the Appellate Authority (first appeal under Section 107) and the High Court. GSTAT benches are being constituted across India following the Supreme Court's 2023 direction. As of 2025-26, GSTAT is operational in most states.

If you disagree with an order of the Appellate Authority under Section 107, you can appeal to GSTAT within 3 months of the order. No pre-deposit of tax is required purely for admission, though interest on the disputed amount continues to accrue during the appeal period.

GSTAT is significant because it provides a specialised, faster forum for GST disputes before matters escalate to the High Court. Long-pending matters that were stuck at the Appellate Authority level now have a clear next step. For any dispute above ₹10 lakh in tax, GSTAT representation by a qualified advocate or CA is strongly recommended.