GST demand notices are issued when tax is not paid, short-paid, or ITC wrongly claimed. Section 73 covers genuine errors (3-year limit, 10% penalty). Section 74 covers fraud/suppression (5-year limit, 100% penalty). This guide covers notice types, timelines, and how to respond effectively.
Formal demand notice issued after investigation. Taxpayer must respond within 30 days with reasons why demand should not be confirmed. This is the primary demand mechanism.
Pre-SCN intimation giving taxpayer an opportunity to pay tax + interest voluntarily BEFORE formal SCN is issued. If paid, proceedings stop. Smart taxpayers use this to avoid penalties.
Summary statement of tax amounts determined as payable. Accompanies or follows the order. Not a separate notice but a summary for payment.
Final adjudication order confirming the demand after hearing. Contains: tax amount, interest, penalty. This is the order you appeal against if unfavourable.
Order rectifying errors in previous orders (arithmetic/clerical errors). Can be issued suo moto or on application within 3 months of original order.
Note the date of receipt — all time limits start from this date. Check: DIN (Document Identification Number) is present (mandatory since Nov 2019, without DIN the notice is invalid).
Go to cbic-gst.gov.in → Search DIN. If the DIN doesn't exist or doesn't match, the notice may be invalid. Several tribunal orders have quashed notices without valid DIN.
Break down: (a) admitted tax (you agree), (b) disputed tax (you disagree), (c) interest calculated, (d) penalty imposed. Identify grounds of dispute — classification, valuation, ITC eligibility, time-barred.
Pay the undisputed portion immediately via GST portal → Electronic Cash Ledger → DRC-03. This stops interest accrual on the admitted amount and shows good faith.
File detailed written reply on GST portal within 30 days. Include: factual narrative, legal grounds, supporting documents, judicial precedents. Request personal hearing.
Present your case before the adjudicating officer. Can appear through authorized representative (CA, Advocate, CMA). Additional documents can be submitted during hearing.
Section 73 applies when tax is not paid or short-paid WITHOUT fraud, suppression, or willful misstatement. Time limit: 3 years, penalty: 10% or ₹10,000. Section 74 applies when there IS fraud, suppression, willful misstatement, or collusion. Time limit: 5 years, penalty: 100% of tax. The burden of proving fraud is on the department under Section 74.
No. Since November 2019, every communication (notice, order, letter) from the GST department MUST have a Document Identification Number (DIN). A notice without DIN is treated as invalid and deemed to have never been issued (CBIC Circular No. 128/47/2019-GST). Several tribunal and court orders have quashed proceedings based on missing DIN.
File Form DRC-06 (reply) on the GST portal within 30 days. Your reply should: (1) Accept undisputed amounts and pay via DRC-03, (2) Contest disputed amounts with facts + legal arguments, (3) Cite relevant case laws and CBIC circulars, (4) Attach supporting documents, (5) Request personal hearing. Being specific and referencing exact provisions strengthens your case.
If you don't respond within 30 days, the adjudicating authority can pass an ex-parte order (without hearing you) confirming the demand in full. This means: full tax + full interest + maximum penalty. You lose the opportunity to present your case but can still appeal the order (within 3 months). However, appeal is harder when you haven't contested at the first stage.
Interest under Section 50 is charged at 18% p.a. on the amount of tax not paid. For wrongful ITC availed and utilized: 24% p.a. Interest is charged from the date the tax was due (not from the date of notice) until the date of payment. Interest is automatic and mandatory — even if the demand is partially reduced on appeal, interest applies on the confirmed amount.
Track demand notices, compute admitted vs disputed tax, generate DRC-03 payment data, and never miss a 30-day deadline.
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