Respond to the notice allegation by allegation: identify what the department says happened, test the evidence and calculation it relies on, supply records that answer the allegation, and make any specific requests for disclosure, a hearing, or cross-examination in writing. Suspicion or third-party evidence does not automatically invalidate a GST demand; the notice, supporting record, statutory provision, and applicable precedent determine whether the demand can stand.
This guide concerns India’s GST framework, principally the Central Goods and Services Tax Act, 2017 (CGST Act). State GST and Union Territory GST laws often operate alongside it. Confirm the issuing authority, governing enactment, tax period, and forum before relying on a procedural point. The section 73 and 74 framework described below distinguishes periods through FY 2023–24; check current amendments, including section 74A or other applicable provisions, for later periods.
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1. Confirm the legal basis and scope of the notice
Start with the complete show-cause notice, including annexures, relied-upon material, the proposed computation, and electronic service details. A demand proceeding gives the taxpayer an opportunity to respond before the officer determines the amount. The notice should identify the amount and the grounds on which the department proposes to demand it.
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For tax periods through FY 2023–24, sections 73 and 74 set out different routes for tax not paid or short paid, erroneous refunds, and wrongly availed or utilised input tax credit:
| Provision | Ground described in the CGST Act for periods through FY 2023–24 | Point to examine |
|---|---|---|
| Section 73 | The specified tax or credit issue is for a reason other than fraud, wilful misstatement, or suppression of facts to evade tax. | Check whether the notice explains the alleged shortfall or credit issue and supports the amount claimed. |
| Section 74 | The specified tax or credit issue is alleged to involve fraud, wilful misstatement, or suppression of facts to evade tax. | Check whether the notice identifies facts supporting the culpable ground, rather than relying on a label or suspicion alone. |
| Section 75(2) | Where the specified fraud, wilful-misstatement, or suppression charge is not established, the section directs determination as if the notice had been issued under section 73. | Consider whether the allegation is actually established and whether section 75(2) applies to the case. |
These are not routes a taxpayer can elect between. The authority’s legal basis and the facts determine the applicable track. Limitation periods and consequences differ, so calculate them from the current statute and the case documents rather than relying on a generic deadline.
2. Build a point-by-point reply from the record
Do not answer a broad allegation with a broad denial. Create an allegation-to-evidence matrix and address each proposed adjustment separately. It helps distinguish a disputed fact, a missing document, a calculation error, and a legal objection.
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| For each allegation, record | What to put in the reply |
|---|---|
| Department’s assertion | Quote or precisely identify the paragraph, period, transaction, amount, or credit challenged. |
| Evidence cited | Name the document, statement, report, third-party record, or computation the notice relies on. If none is identified, say what is missing. |
| Your position | State what is admitted, denied, or not known, and explain why. Avoid treating an inference as an established fact. |
| Relevant records | Identify and attach the contemporaneous records that address the point, such as invoices, contracts, bank entries, transport or delivery records, stock records, correspondence, returns, reconciliations, or accounting records, as relevant. |
| Requested action | State the finding you seek or the procedural step needed to answer the allegation, such as disclosure of a specified document or a hearing. |
Reconcile the department’s figures against the relevant returns, ledgers, invoices, payments, and other records. Explain any mismatch rather than simply providing a large bundle of documents. A record may support your account, but no single category of document proves entitlement in every case.
3. Request the material needed to answer the case
If the notice refers to material you have not received or cannot identify, request it expressly in the reply. Specify the document, statement, report, third-party record, or calculation sought, and explain how it relates to the allegation or amount. For a computation, identify the figures or method that need clarification. A targeted request is more useful than a blanket demand for every investigative document.
Do not assume every investigative document must always be disclosed. Any entitlement, restriction, or claim of privilege depends on the material and circumstances. State what you need to respond fairly and ask the officer to address the request. Keep the filed reply, attachments, acknowledgement, proof of service, and any response to the request.
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4. Challenge third-party statements or reports with specifics
For each third-party item, identify who made it, when, what it concerns, how that person or record is connected to you, and the proposition for which the department relies on it. Then address whether the maker appears to have firsthand knowledge, whether the material is complete and in context, whether independent records corroborate it, and whether it conflicts with contemporaneous business records.
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In W.P.(C) 4853/2025, the Delhi High Court discussed cross-examination of persons whose statements were relied on against the petitioner and connected the issue with the hearing contemplated by section 75(4). The court stated: “Basic requirement of the rule of law is that before condemning a person that too on the basis of a statement of third party, the party against whom such statements have been relied upon is to be granted an opportunity to cross examine the person who gave that statement.” The ruling concerns the circumstances and procedural posture before that court. It is not a guarantee that every cross-examination request in every GST proceeding will be allowed; consider the relevant forum, facts, and later precedent.
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5. Request a hearing and a reasoned decision
Section 75(4) of the CGST Act provides for an opportunity of hearing if the person chargeable with tax or penalty requests one in writing, or where an adverse decision is contemplated. Make the request expressly in the reply. Identify the disputed facts or evidence that require oral consideration, and keep a copy of the request. Section 75(5) permits adjournment for sufficient cause, with reasons recorded, and limits adjournments to three during the proceedings.
The final order should set out the relevant facts and the basis of the decision. Under section 75, the amount demanded cannot exceed the amount specified in the notice, and the order cannot confirm a demand on grounds outside those stated in the notice. When the order arrives, compare it with the notice, your reply, and the hearing record. Identify any new ground, unexplained rejection of material evidence, arithmetic mismatch, or reliance on a statement you had no meaningful chance to address. Whether a defect warrants setting aside an order depends on its significance and the record.
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6. Preserve the first-stage record for appeal
Submit important evidence during adjudication where possible, and explain in writing if you could not produce it. The CBIC appeal rules describe Form GST APL-01 for an appeal to the Appellate Authority. Rule 5 restricts additional oral or documentary evidence on appeal, subject to specified circumstances, including where the adjudicating authority refused evidence that should have been admitted, sufficient cause prevented its production, or the order was made without sufficient opportunity to adduce relevant evidence. The appellate authority must record written reasons for admitting additional evidence and give the department an opportunity to examine or rebut it.
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After an adverse order, promptly check the applicable appeal deadline, pre-deposit, filing method, and form against the current Act, rules, order, and any relevant notifications. The correct calculation depends on the order and service dates, tax period, and procedural history; do not use a generic deadline as a substitute. Preserve the notice, reply, attachments, acknowledgement, hearing notes, order, and service records.
7. Use a practical preparation checklist
- Obtain the complete notice, annexures, relied-upon documents, computation, and electronic service details.
- Verify the GSTIN, issuing officer, governing law, tax period, demand provision, and whether a fraud, wilful-misstatement, or suppression allegation is made.
- Prepare an allegation-to-evidence matrix and reconcile each proposed amount against relevant returns, invoices, ledgers, contracts, payment records, delivery evidence, and correspondence.
- Request specific missing material. Ask for a written hearing and, when a third-party statement materially matters, make a reasoned request to question its maker.
- Check limitation, jurisdiction, proper officer, notice specificity, statutory elements, computation, interest, penalty, and any applicable circular or binding precedent against the actual file and current law.
- File through the applicable channel and retain the filed copy, acknowledgement, attachments, proof of service, and hearing notes.
- If an order issues, compare it with the notice and reply, identify appeal grounds, and calendar the applicable deadline immediately.
Keep the legal position tied to the case
A GST demand is not defeated merely because the department relies on an inference or third-party information. The useful challenge is to show precisely what is unsupported, contradicted, undisclosed, miscalculated, outside the notice, or procedurally unfair in your case. The section 73 and 74 distinctions above are limited to periods through FY 2023–24; for other periods, confirm the law then in force and the current provisions with a qualified GST professional.
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