DRC-07 — GST Summary of Demand Order
The final order crystallising your GST demand after adjudication proceedings. Not a show cause notice — this is the outcome. You must pay or appeal within 3 months.
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What is a DRC-07?
Form DRC-07 is the Summary of the Order issued by the GST adjudicating authority after completion of demand proceedings under Section 73 (non-fraud cases) or Section 74 (fraud/suppression cases) of the CGST Act, 2017.
DRC-07 is issued after the full Show Cause Notice process: DRC-01 (SCN) → DRC-06 (reply by taxpayer) → personal hearing → adjudication order. The DRC-07 summarises the final confirmed demand: tax, interest, and penalty. If you have not already settled the demand through DRC-03 (voluntary payment), you must now act within 3 months.
| Provision | Details |
|---|---|
| Section 73, CGST Act | Demand for non-fraud cases — tax short-paid or ITC excess claimed without fraud |
| Section 74, CGST Act | Demand for fraud / wilful misstatement / suppression of facts |
| Form DRC-07 | Summary of the Order — issued by adjudicating authority |
| Rule 142(5), CGST Rules | Issue of DRC-07 after adjudication order |
| Section 107, CGST Act | Appeal to Appellate Authority — within 3 months of order |
What DRC-07 Contains
The DRC-07 order will specify:
- The tax demand — GST short-paid or ITC wrongly availed (broken down by CGST/SGST/IGST)
- Interest at 18% per annum under Section 50 from the due date of payment to the date of payment
- Penalty — 10% of tax (minimum ₹10,000) under Section 73; or 100% of tax (equal to tax amount) under Section 74 (fraud)
- The assessment period and financial year(s) covered
- Reference to the DRC-01 SCN and DRC-06 reply filed
Section 73 vs Section 74 — Critical Differences
| Aspect | Section 73 (No Fraud) | Section 74 (Fraud / Suppression) |
|---|---|---|
| Grounds | Genuine error, ITC mismatch, short payment — no fraud | Fraud, wilful misstatement, suppression of facts |
| Penalty in DRC-07 | 10% of tax or ₹10,000 (whichever higher) | 100% of tax (equal to full tax amount) |
| Limitation period | 3 years from annual return due date | 5 years from annual return due date |
| Reduced penalty if paid before order | Nil penalty if paid before SCN; 10% if paid before order | 15% if paid before SCN; 25% if paid before order |
| Pre-deposit for appeal | 10% of disputed tax | 20% of disputed tax |
Your Options After Receiving DRC-07
Option 1 — Pay the Demand
If you accept the demand or wish to avoid further proceedings, pay through Form DRC-03 on the GST portal. Paying within 30 days of order may attract a reduced penalty under Section 73 (if the Section 73 reduced penalty benefit has not already been availed). Interest continues to accrue until payment date.
Option 2 — File an Appeal
If you dispute the demand, file Form APL-01 before the Appellate Authority (AC/DC/ADC/JC/Additional/Joint Commissioner Appeals) within 3 months. A mandatory pre-deposit of 10% of disputed tax (Sec 73) or 20% (Sec 74) is required. The remaining demand is stayed during appeal.
Interest calculation: Interest at 18% per annum accrues from the original due date (not the DRC-07 date) on the entire unpaid tax amount. Every day of delay increases your liability. Even if you intend to appeal, calculate and understand the total interest accruing.
Steps to File an Appeal Against DRC-07
Calculate Your Pre-Deposit Obligation
Compute 10% (Section 73) or 20% (Section 74) of the disputed tax amount. This pre-deposit must be paid through DRC-03 before filing the appeal. The pre-deposit amount cannot be in excess of ₹25 crore for Section 73 or ₹50 crore for Section 74 (as per Finance Act 2024 amendment).
Pay Pre-Deposit via DRC-03
Log in to the GST portal → Services → Payments → Create Challan → pay the pre-deposit amount under the head "Others" (DRC-03). Note the CRN (Challan Reference Number) — this is required when filing APL-01.
File APL-01 on the GST Portal
Go to GST portal → Services → User Services → My Applications → Application Type: Appeal to Appellate Authority. Fill Form APL-01 — attach the DRC-07 order, your DRC-06 reply, the pre-deposit challan, and your grounds of appeal. Submit within 3 months of DRC-07 date.
Grounds of Appeal — Key Arguments
Strong grounds include: incorrect computation of tax or ITC; wrong classification or rate applied; demands already paid through electronic cash/credit ledger; limitation period lapsed; natural justice violated (opportunity of hearing not given); factual errors in the order; legal grounds under CGST Act or Rules.
DRC-07 Appeal Template — Grounds of Appeal
This is the statement of facts and grounds to include in Form APL-01. Customise to your specific situation.
STATEMENT OF FACTS AND GROUNDS OF APPEAL
[To be filed as part of Form APL-01 on the GST Portal]
Appellant: [LEGAL NAME]
GSTIN: [GSTIN]
Order No. (DRC-07): [ORDER NUMBER]
Order Date: [DATE]
Demand Amount: Tax ₹[AMOUNT] + Interest ₹[AMOUNT] + Penalty ₹[AMOUNT]
Section: [73 / 74] of the CGST Act, 2017
Pre-deposit paid: ₹[AMOUNT] via DRC-03, CRN: [CRN], Date: [DATE]
STATEMENT OF FACTS
1. The Appellant is a registered GST taxpayer bearing GSTIN [GSTIN],
engaged in [NATURE OF BUSINESS].
2. A Show Cause Notice in Form DRC-01 was received on [DATE] for the
period [TAX PERIOD(S)] alleging [BRIEF DESCRIPTION OF ALLEGATION].
3. The Appellant filed a detailed reply in Form DRC-06 on [DATE],
providing complete documentary evidence demonstrating [SUMMARY OF
DEFENCE].
4. A personal hearing was granted on [DATE / not granted — cite this
as a ground of natural justice violation if applicable].
5. Despite the reply and documentary evidence, the adjudicating authority
passed the impugned order in Form DRC-07 on [DATE] confirming the
demand of ₹[TOTAL AMOUNT].
GROUNDS OF APPEAL
Ground 1 — Factual Error / Incorrect Computation:
[The demand has been raised on the basis of incorrect facts. The
actual tax liability for the period in question is ₹[AMOUNT] as
against the demand of ₹[AMOUNT] for the following reasons:
EXPLAIN THE SPECIFIC FACTUAL ERROR]
Ground 2 — ITC Eligibility / Reconciliation:
[The Input Tax Credit disallowed amounting to ₹[AMOUNT] was correctly
availed as per Section 16 of the CGST Act. The ITC pertained to
[describe supplies]. Documentary evidence including GSTR-2B, supplier
invoices, and payment confirmation was provided with the DRC-06 reply
but not considered in the impugned order.]
Ground 3 — Limitation (if applicable):
[The demand for the period [PERIOD] is barred by limitation. The due
date of the annual return for FY [YEAR] was [DATE]. The DRC-01 was
issued on [DATE], which is beyond the 3-year limitation period
prescribed under Section 73(10) of the CGST Act.]
Ground 4 — Natural Justice (if applicable):
[The adjudicating authority did not grant an adequate opportunity of
personal hearing before passing the impugned order, in violation of
the principles of natural justice and Section 75(4) of the CGST Act.]
Ground 5 — Tax Already Paid:
[An amount of ₹[AMOUNT] was already paid through the Electronic Cash /
Credit Ledger during the relevant period as evidenced by [PAYMENT
EVIDENCE]. This amount has not been given credit in the impugned order.]
PRAYER
In view of the above facts and grounds, it is most respectfully prayed
that this Hon'ble Appellate Authority may be pleased to:
(a) Set aside / modify the impugned order dated [DATE] passed in Form
DRC-07;
(b) Hold that the demand confirmed in the impugned order is incorrect
to the extent of ₹[AMOUNT];
(c) Direct refund of the pre-deposit amount of ₹[AMOUNT] in the event
of full relief; and
(d) Pass such other order as may be just and proper in the facts and
circumstances of the case.
[Authorised Signatory]
[GSTIN] [Date]
Related GST Notices
DRC-07 Received? Your 3-Month Window Is Running.
The decision to pay or appeal — and how to structure an appeal — requires careful analysis of the order, the grounds, and your pre-deposit position. A wrong choice now can be expensive. Get expert guidance before the deadline passes.