GST Notice Reply — SCN Response & Representation

What should you do when a GST notice arrives?

Record the date and mode of service, the notice number, GSTIN, tax periods, statutory provision and response deadline. Download the complete notice and annexures from the official portal. An ASMT-10 scrutiny notice, DRC-01 show-cause notice, DRC-01A intimation and an adjudication order are not interchangeable. Avoid admitting an unexplained demand before reconciling the underlying records.

How is a GST notice reply prepared?

Prepare an issue-by-issue reconciliation of returns, books, invoices, e-way bills, credit notes, input-tax-credit evidence and payments. Separate factual errors, computation errors, limitation and substantive legal grounds. Attach an indexed evidence pack, identify missing relied-upon documents and request them where necessary. File the applicable portal response, including DRC-06 for the relevant show-cause process, retain its acknowledgement and request a personal hearing where appropriate.

How are section 74A cases different?

For FY 2024-25 onward, check section 74A rather than applying the old section 73/74 timeline automatically. Review the 42-month notice limit, the order timeline, the allegation of fraud or suppression and the distinct payment/penalty windows. A mismatch is not by itself proof of fraud. The response should address both the computation and the evidence supporting the alleged conduct.

What happens after the reply?

Track hearing notices, submit any authorised supplementary evidence and obtain the reasoned order. A notice reply is not an appeal. If an adverse order is passed, preserve the communication date and assess the appropriate appeal and pre-deposit promptly. See the GST appeal service for section 107 and GSTAT representation.

Official statutory source

https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/acts/2017_CGST_act/active/chapter15/Section74A_v1.00.html

Last updated: 14 Oct 2026

Quick Answer: Virtual Auditor offers professional representation for responding to GST Show Cause Notices, including DRC-01 and ASMT-10. The service is designed to address allegations through evidence-based legal arguments and reconciliation statements, aiming to avoid demand orders. It is essential for businesses to reply correctly within the statutory period to prevent further litigation.

Expert GST show cause notice reply, DRC-01 response, Section 73/74 notices, GST demand orders, and GST SCN representation by experienced CA professionals.

GST Show Cause Notices — An Overview

Receiving a GST Show Cause Notice (SCN) is increasingly common as the GST administration strengthens its data analytics — comparing GSTR-1 vs GSTR-3B, GSTR-2B vs ITC claimed, e-way bill data vs declared turnover, and cross-matching supplier and recipient data. A well-drafted SCN reply is the most critical step in the GST litigation process — get it right here, and you can avoid demand orders, appeals, and years of litigation altogether.

Key principle: A proper SCN reply that addresses every allegation with documentary evidence and legal arguments can result in the SCN being dropped entirely — saving 100% of the disputed amount. An incomplete or rushed reply, on the other hand, leads to demand orders that must be appealed.

Types of GST Notices

Notice Type	Legal Provision	Nature	Penalty
DRC-01A (Pre-SCN)	Rule 142(1A)	Informal notice before SCN — opportunity to pay and avoid SCN	—
DRC-01 SCN (Section 73)	CGST Act S.73	Genuine error, no fraud alleged	10% of tax (minimum ₹10,000)
DRC-01 SCN (Section 74)	CGST Act S.74	Fraud / wilful misstatement / suppression	100% of tax (mandatory)
ASMT-10	CGST Act S.61	Scrutiny of returns — discrepancy notice	No demand at this stage
ADT-01	CGST Act S.65/66	Audit notice (departmental or special audit)	Demand if discrepancy found in audit
RFN (Refund)	CGST Act S.54	Deficiency memo for refund claim	No demand — refund delayed

The 5 Most Common GST SCN Scenarios

1. ITC Mismatch (GSTR-2A/2B vs Books)

Authorities compare ITC claimed in GSTR-3B vs GSTR-2A/2B. Discrepancies arise when:

Supplier filed GSTR-1 late (ITC reflects in later 2A/2B)
Supplier filed wrong HSN code causing non-match
Input services availed — some don't appear in 2B if supplier is composition dealer

Reply strategy: Provide a reconciliation statement showing timing differences. Quote Section 16(2)(aa) and Rule 36(4) — GSTR-2B matching requirement applies prospectively. Cite case law (e.g., State of Gujarat v. Arcelor Mittal) where courts have upheld ITC in timing mismatch cases where supplier genuinely filed and paid.

2. GSTR-1 vs GSTR-3B Turnover Mismatch

A common SCN ground. Causes: debit notes/credit notes issued late, amendments in GSTR-1 not reflected in 3B, different reporting of advance receipts.

Reply strategy: Month-wise reconciliation showing the reason for difference. Show that tax has been paid correctly (no revenue leakage) even if timing differs.

3. Ineligible ITC Claims

Section 17(5) blocks ITC on: motor vehicles (for personal use), food and beverages, outdoor catering, membership of clubs, insurance for employees. SCNs raise ITC reversal demands when these are found in books.

Reply strategy: Distinguish the specific usage — e.g., motor vehicles used exclusively for taxable supply (delivery vans) are eligible. Food provided as employee welfare in cases where the employer is legally obliged (canteen mandated under Factories Act) may be eligible based on recent AAR rulings.

4. Wrong Classification / Rate

GST rate on goods/services was applied at a lower rate than applicable.

Reply strategy: Cite relevant notifications, advance rulings, CBIC clarification circulars. If genuine doubt existed, argue bona fide interpretation and request penalty waiver under Section 73 (no fraud allegation).

5. Reverse Charge Non-Compliance

RCM on legal services, GTA, import of services, security services, renting of immovable property from unregistered person — these are commonly missed, especially by companies not on self-service GST filing.

Reply strategy: Compute RCM liability, pay it with interest, and file GSTR-3B amendment. In the reply, show that payment has been made and ITC is simultaneously available, resulting in nil net revenue impact on government (relevant for penalty quantum).

How to Draft a Winning SCN Reply

Address every paragraph of the SCN individually — courts have held that unanswered allegations are deemed admitted
File facts chronologically — timeline of transactions, filings, payments
Attach all supporting documents — invoices, ledgers, payment challans, audit reports, contracts
Cite statutory provisions — CGST/SGST Act sections, Rules, relevant notifications
Cite favourable case law — High Court and GSTAT decisions on similar facts
Raise procedural objections — SCN issued beyond time limit (Section 73: 3 years, Section 74: 5 years) or by officer without jurisdiction
Request personal hearing — always request a personal hearing under Section 75(4); never waive this right

Pre-Deposit Strategy and Tax Payment

If you receive a DRC-01A (pre-notice communication), you can voluntarily pay the shortfall tax with interest to avoid the formal SCN. For Section 73 cases, if you pay tax, interest, and 10% penalty before the SCN date, no SCN will be issued. This is often the fastest resolution.

Never pay under Section 74 without CA advice: Paying the demand acknowledges the fraud allegation (which may attract criminal proceedings separately). Under Section 74, first contest the classification as S.74 if fraud is genuinely absent.

Our GST Notice Reply Service

SCN analysis — is it S.73 or S.74? Is it time-barred? Jurisdictional issues?
Reconciliation preparation (GSTR-1/3B/2A/2B reconciliation statement)
Drafting of detailed written reply with case law citations
Document preparation and indexing
Personal hearing representation before GST adjudicating authority
Post-hearing submissions and additional documents
Appeal filing if demand order is unfavourable (Section 107)

Received a GST notice? Don't delay — reply deadline is typically 15–30 days.

Get GST Notice Reply Help Call +91-9962 260 333

Engagement terms for GST notice reply and appeal — reviewed 25 October 2026

Fee: Reply to a notice (ASMT-10, DRC-01A, DRC-01) from ₹15,000 + 18% GST. Appeal under section 107 from ₹20,000 + 18% GST. The statutory pre-deposit, any tribunal fees and amounts paid under protest are the taxpayer's.
Extra / not included: Personal hearing attendance is included for the reply or appeal; a further appeal or writ is a separate engagement. No outcome is guaranteed.
Turnaround: Reply drafted within 7 working days from receipt of complete information and the advance payment and in any case before the date fixed in the notice.
Who signs: Filings and replies are prepared and signed by V. Viswanathan FCA or another qualified Chartered Accountant of the practice, depending on the engagement.
Entity: Engagement letter and invoice are issued by Virtual Auditor Private Limited.
What to send first: Send the notice or order with its date of service, the tax period, GST login, and the returns and reconciliations for that period.
Next step: Send your enquiry on WhatsApp to +91 99622 60333; we confirm the scope, fee and timeline in writing before work starts.

Frequently Asked Questions

What is a GST Show Cause Notice (SCN)?

A GST Show Cause Notice (SCN) is a formal notice issued by a GST officer asking the taxpayer to explain why a demand for tax, penalty, or interest should not be confirmed. It is a mandatory due process requirement before any demand order can be passed under CGST Act Sections 73 or 74.

What is the difference between Section 73 and Section 74 GST notices?

Section 73 notices are for genuine mistakes, inadvertent errors, or difference of opinion — no fraud or wilful misstatement. Section 74 notices are for cases involving fraud, wilful misstatement, or suppression of facts. Section 74 carries a mandatory 100% penalty (reducible to 15% only if paid before SCN), while Section 73 carries 10% penalty.

What is DRC-01?

DRC-01 is the GSTN form used to issue Demand notices under CGST Rule 142. DRC-01A is the summary of demand (pre-SCN notice); DRC-01 is the formal Show Cause Notice. The taxpayer responds via DRC-01B (personal hearing request) or directly in the adjudication proceedings.

What is the time limit for replying to a GST SCN?

The SCN typically gives 15–30 days to file a reply. You can request extension of time in writing if more time is needed. Adjudication officers generally grant one extension. Missing the reply deadline results in ex-parte orders, which are harder to contest in appeal.

What are the common grounds for GST SCNs?

Common reasons: (1) ITC mismatch between GSTR-2A/2B and books, (2) Turnover difference between GSTR-1 and GSTR-3B, (3) ITC claimed on ineligible items, (4) Wrong classification of goods/services, (5) Reverse Charge Mechanism non-compliance, (6) E-way bill violations, (7) Export refund irregularities.

Can a GST SCN be withdrawn?

Yes. If you can demonstrate through your reply that the demand is incorrect, the adjudicating authority can drop the SCN and not issue any demand order. This is the best outcome — it avoids both payment and litigation.

What happens if I don't reply to a GST SCN?

The adjudicating officer passes an ex-parte demand order without hearing your side. You still have the right to appeal against this order within 3 months, but you will need to pay a 10% pre-deposit of the disputed amount to admit the appeal.

I received this GST notice. What is it asking, what should I do next, and what evidence is needed?

First identify the form: ASMT-10 is a scrutiny query on your returns, DRC-01A is a pre-notice intimation, DRC-01 is a show cause notice that proposes a demand (under section 73 or 74 for periods up to 2023-24, and section 74A from 2024-25), and REG-17 proposes cancellation of registration. An order, such as DRC-07, is different from a notice: it is challenged by appeal, not by a reply. Check the date, the response deadline stated in the notice, the tax periods and whether the time limit for issuing it was met. Then reconcile the department’s figures with your returns, books, GSTR-2B and invoices, and gather the evidence for each disputed item. Reply in writing on the portal and ask for a personal hearing. We review the notice confidentially and prepare an issue-by-issue reply.

Time Limits for GST Adjudication — Key Provisions

GST demands have a time limitation that is critical to know:

Section	Nature of Default	Time Limit for SCN	Time Limit for Demand Order
73	No fraud / genuine error	3 years from due date of annual return	1 year from date of SCN
74	Fraud / wilful misstatement	5 years from due date of annual return	1 year from date of SCN

If the SCN is issued beyond these time limits, the entire proceeding is invalid — challenge this as a preliminary objection in your reply. The limitation period is calculated from the due date of filing the annual return (GSTR-9) for the relevant financial year, not from the date of the alleged default.

Personal Hearing Rights

Section 75(4) of the CGST Act guarantees the right to be heard before any adverse order is passed. You must always exercise this right — request a personal hearing in every SCN reply. If an adverse order is passed without granting personal hearing despite your written request, the order is procedurally defective and can be challenged on this ground alone. Under the faceless assessment regime for GST (being rolled out), hearings may be through video conferencing — ensure you request this explicitly.

Officer Jurisdiction — Common Challenge Ground

GST officers have jurisdiction based on taxpayer turnover and geographic jurisdiction. Key jurisdiction points:

Taxpayers above ₹1.5 crore turnover: Central GST (CGST) officers have jurisdiction for 50% of taxpayers; State GST (SGST) officers for the other 50% — the split is determined centrally
If the notice is issued by an officer of the wrong administrative wing (Central vs State), it is a jurisdictional defect
Service through wrong email or old address when the company has updated its GST registration: notice may be challengeable
Adjudicating officer's rank determines the tax quantum they can adjudicate — SCNs above certain thresholds must be issued by higher-ranking officers

Pre-Consultation Strategy Before Drafting the Reply

Before drafting any GST SCN reply, invest 2–3 hours in this pre-consultation exercise:

Reconstruct what the officer knows: Pull your GSTR-1, GSTR-3B, GSTR-2A, GSTR-2B, GSTR-9, and EWB data for the period. The officer has all of this. Understand exactly where the discrepancy arose.
Compute the worst case: If every allegation is accepted, what is the maximum tax + interest + penalty? This determines urgency and proportionality of your response effort.
Check for time bar: Was the SCN issued within the Section 73/74 time limit? Calculate from the GSTR-9 due date for the relevant FY.
Identify your strongest grounds: Is it a timing difference (strong ground)? A genuine error already corrected? Or is there a substantive shortfall that needs to be explained or paid?
Decide on payment strategy: For genuine errors with no dispute, paying the tax + interest + 10% penalty before the adjudication order avoids the mandatory 100% penalty that may be imposed in an adverse order.

Related Services

Which laws govern this service? — GST

The statutory provisions this service is delivered under, linked to the official text:

What has changed in the law — reviewed October 2026

Income-tax Act, 2025: assented to on 21 August 2025 and in force from 1 April 2026, it replaces the Income-tax Act, 1961 for tax year 2026-27 onward, and the Income-tax Rules, 2026 (notified 20 March 2026) replace the 1962 Rules. Section and rule numbers on this page are those of the 1961 Act and 1962 Rules, which continue to govern assessments, appeals and pending proceedings for assessment years up to 2026-27; for tax year 2026-27 onward the corresponding provisions of the 2025 Act apply, and our engagement letters quote both.
GST demands for tax periods from FY 2024-25 onward are raised under section 74A of the CGST Act, 2017 (inserted by the Finance (No. 2) Act, 2024, in force from 1 November 2024) with one time limit — notice within 42 months of the annual-return due date and order within 12 months of the notice — and a 60-day window for reduced penalty; sections 73 and 74 continue to apply to tax periods up to FY 2023-24.