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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchA GST demand notice is a formal show-cause process asking why specified tax, interest and any applicable penalty should not be recovered. Your first task is not to pay automatically or ignore it: identify the legal section and tax period, test the allegations against your records, recalculate every figure, and preserve your right to a hearing and appeal. Sections 73 and 74 of the Central Goods and Services Tax (CGST) Act follow different rules, and the deadlines shown in older Act text must not be treated as universal for every notice issued in 2026.
This guide covers central GST procedure. The matching State GST or Union Territory GST provision, the notice’s jurisdiction and the statutory version applicable to the relevant tax period must be checked for an individual case.
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What a GST demand notice means
A demand notice normally asks you to explain why an alleged tax short payment, erroneous refund or wrongly availed or utilised input tax credit should not be confirmed, together with interest and any penalty. It is a proposed demand, not automatically a final order. The notice should identify the tax period, factual allegations, legal basis and amounts relied upon.
The section cited matters because it determines the alleged conduct, limitation framework, penalty exposure and payment consequences. Under the CGST Act text hosted by the Central Board of Indirect Taxes and Customs (CBIC), section 73 covers cases for reasons other than fraud, wilful misstatement or suppression of facts to evade tax. Section 74 covers cases alleged to involve fraud, wilful misstatement or suppression to evade tax. Read the actual facts, not just the heading. Read the CBIC-hosted CGST Act text.
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If an appellate authority, tribunal or court finds that the section 74 fraud or suppression allegation is not established, section 75(2) provides for determination as if the notice had been issued under section 73. That possibility makes the factual response important even where the notice uses section 74.
Sections 73 and 74 compared
| Issue | Section 73 | Section 74 |
|---|---|---|
| Alleged basis | Tax not paid or short paid, erroneous refund, or wrongly availed or utilised input tax credit for reasons other than fraud, wilful misstatement or suppression to evade tax. | The same categories of tax, refund or input-tax-credit issue alleged to arise through fraud, wilful misstatement or suppression to evade tax. |
| Order period in the retrieved Act text | Three years from the due date for the annual return for the relevant financial year, or three years from the date of an erroneous refund. | Five years from the due date for the annual return for the relevant financial year, or five years from the date of an erroneous refund. |
| Minimum notice lead period stated in that text | At least three months before the applicable order limit. | At least six months before the applicable order limit. |
| Penalty framework in the retrieved text | Adjudicated penalty is the higher of 10% of tax or ₹10,000, subject to statutory terms; specified early payment can remove the penalty. | The section is framed around a penalty equivalent to the tax, with reduced-penalty settlement windows. |
| Early-payment routes | Tax and interest paid before notice can prevent a notice for the amount paid; tax and interest paid within 30 days of the notice generally concludes proceedings without penalty. | Pre-notice payment route includes tax, interest and a 15% penalty; payment within 30 days after notice uses a 25% penalty; payment within 30 days after order communication uses a 50% penalty, subject to all statutory conditions. |
The figures in this table come from the Act text retrieved by CBIC. They are not a universal 2026 deadline statement. Confirm which amendment and statutory version governs the tax period, including whether section 74A applies and from what date. The materials available here do not establish section 74A’s current commencement or application, so do not rely on a section 73 or 74 date without checking an authoritative current Act or Gazette text.
Time limits: how to calculate them safely
Start with the correct statutory event
For an annual-return based period, identify the due date for the annual return for the relevant financial year. For an erroneous-refund case, identify the date of the refund. Apply the order period in the provision and version that governs that tax period. A printed date on the notice is not enough to prove that the demand is timely.
Check notice lead time and exclusions
The retrieved section 73 text requires the notice at least three months before the order deadline; the section 74 text requires at least six months. The Act also excludes specified periods in circumstances such as a court or tribunal stay. Check every exclusion, extension, amendment and documented stay before calculating the last permissible date.
Do not assume the older framework covers every 2026 notice
The CBIC material retrieved for this guide did not resolve section 74A or its commencement and tax-period application. A defensible limitation calculation therefore records the tax period, annual-return or refund date, governing statutory version, any exclusion and the date the notice or order was communicated. Obtain current professional advice where the deadline is close.
What to do when the notice arrives
- Record service immediately. Save the portal download, email or other service record, the date and method of communication, the response deadline and any hearing date.
- Map each allegation. Create a schedule listing the section, financial year, return period, tax head, alleged short payment, refund or input-tax-credit issue, factual ground and amount.
- Download every attachment. Keep the detailed notice, annexures, relied-upon statements, computation sheets, electronic summary and earlier correspondence in an indexed folder.
- Compare summary and detail. Rule 142 refers to DRC-01 for a summary of a specified notice and DRC-02 for a statement covering additional periods on the same grounds. A summary does not replace checking the detailed allegations and calculation.
- Reconcile source records. Match the demand to returns, invoices, e-way bills where relevant, contracts, ledgers, credit notes, payment challans, input-tax-credit reconciliations and prior replies.
- Ask for a hearing in writing when needed. Retain proof of delivery. Section 75 requires a hearing where the person chargeable with tax or penalty requests one in writing, or where an adverse decision is contemplated.
- Calendar every route. Track the reply date, hearing date, payment window, expected order date and the three-month first-appeal period from communication of the order.
How to test the amount demanded
Tax calculation
Reperform the officer’s arithmetic from the underlying transactions. Separate taxable value, rate, tax head, period and any amounts already paid or reversed. Check whether the notice combines periods or issues that require separate legal analysis. If an amount is unsupported by an invoice, return, ledger entry or stated statutory ground, identify the exact discrepancy and attach the record that resolves it.
Interest
Interest is linked to section 50, but a single universal rate cannot be stated safely from the available material. The applicable notified rate, tax or credit category, due date, payment chronology, amendments and any relevant calculation rule must be checked for the facts. Recalculate interest period by period, show the start and end dates, credit payments on the dates they were actually made, and explain any difference from the notice. Do not accept a bare interest total without its rate, period and principal.
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Penalty
For the retrieved section 73 text, the adjudicated penalty is the higher of 10% of tax or ₹10,000, subject to the statutory terms. For section 74, the provision frames the penalty as equivalent to the tax, while allowing reduced-penalty outcomes in specified payment windows. The notice should state why the selected section and penalty apply. A calculation that omits the alleged fraud, wilful misstatement or suppression facts is not a substitute for proving them.
Payment options and what they can end
| Stage | Section 73 route in the retrieved text | Section 74 route in the retrieved text |
|---|---|---|
| Before show-cause notice | Pay tax and interest. A notice should not be issued for the amount paid, subject to statutory conditions. | Pay tax, interest and a 15% penalty, subject to the section’s conditions. |
| Within 30 days after notice | Pay tax and interest. Proceedings for that notice generally conclude without penalty, subject to the statutory conditions. | Pay tax, interest and a 25% penalty. The section provides for conclusion if all conditions are met. |
| Within 30 days after order communication | No equivalent section 73 reduced-penalty window is stated in the retrieved material. | Pay tax, interest and a 50% penalty for deemed conclusion, subject to the statutory conditions. |
Payment is not automatically the best choice. Before using a reduced-penalty route, confirm the governing section and tax-period version, that the payment covers the full amount required, how it must be reported and acknowledged, and whether payment concludes the ability to contest that amount. Rule 142 refers to DRC-03 for payment intimation, DRC-04 for acknowledgement and DRC-05 for conclusion in specified cases. Save the challan, filing acknowledgement and any portal status.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Writing an effective reply
Use an allegation-by-allegation format
Begin with a short chronology and a table matching each allegation to your position, amount disputed, legal reason and supporting document. Distinguish facts, arithmetic and law. If only part of a demand is admitted, identify the admitted amount and explain how it was paid or will be paid without treating the disputed balance as conceded.
Index the evidence
Use numbered annexures and a document index. Typical evidence includes filed returns, sales and purchase registers, invoices, contracts, delivery records, bank statements, electronic credit ledgers, reconciliations, payment challans and prior departmental correspondence. Explain what each document proves; do not upload an unlabelled data dump.
Request a hearing and address jurisdiction
Make a written hearing request if clarification, cross-checking or oral submissions are needed. Confirm whether the notice is issued under central, State or Union Territory GST authority and whether another authority has already dealt with the same period. Keep submission receipts and portal timestamps.
Procedural limits on the final order
Section 75 requires the order to set out relevant facts and the basis of the decision. It also limits the result: The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.
Compare the order line by line with the notice. A new ground, a higher amount or an unexplained calculation should be identified as a possible challenge point.
The Act also states: An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.
If an appeal or court review changes the tax, the related interest and penalty are adjusted accordingly under the statutory scheme.
How to appeal a GST demand order
- Identify the communication date. Section 107(1) generally gives three months from the date the adjudicating authority’s decision or order is communicated. Use the communication record, not merely the date printed on the order.
- Separate admitted and disputed amounts. The statutory pre-deposit framework requires payment of admitted amounts and the prescribed percentage of the remaining tax in dispute, subject to the exact conditions then in force.
- Prepare the record. Assemble the order, notice, reply, hearing request, evidence index, payment proof, calculation and communication acknowledgement.
- File through the applicable route. Confirm the CGST or matching SGST/UTGST appeal authority, portal procedure, prescribed form, fee and document requirements under the current Appeal Rules.
- Protect against delay. If filing is late, include the sufficient-cause explanation and supporting proof. Condonation is limited by the statute; do not assume an indefinite extension.
Keep the electronic filing acknowledgement and pre-deposit challan. A notice, order and appeal are separate procedural stages; payment made at one stage does not by itself prove that every later requirement has been met.
Section 128A relief for certain older section 73 cases
CBIC Circular 238/32/2024-GST describes section 128A relief for specified section 73 demands relating to financial years 2017-18, 2018-19 and 2019-20. Eligibility and procedure are bounded by statutory and procedural conditions, and the circular discusses application forms and issues such as withdrawal of certain pending appeals or writs.
This is not a blanket waiver of GST interest or penalties. Check whether the particular demand, tax period, payment history, pending proceeding and application satisfy the current conditions and any later procedural directions before relying on the relief.
Practical decision rule
Choose among replying, paying, or appealing only after matching the tax period to the governing statutory version and quantifying the consequence of each route. A defensible file contains the service proof, section and factual analysis, limitation calculation, transaction-level reconciliation, written hearing request where appropriate, payment acknowledgements and an appeal calendar. When the amount is material, fraud or suppression is alleged, or the deadline is near, obtain advice from a qualified GST professional familiar with the relevant State or Union Territory jurisdiction.
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