A GST show-cause notice (SCN) is a formal statement of what a tax authority proposes to demand or otherwise decide, and an opportunity for the company to respond before a final order. It is not, by itself, a final finding that tax is payable. The company must read the cited provision, tax period, allegations, amounts, deadline and filing directions, then preserve records and submit a reasoned response through the route specified in that notice.
What a GST show-cause notice means
Under India’s Central Goods and Services Tax (CGST) demand provisions, an SCN explains the tax authority’s proposed case and invites the taxpayer to show why the proposed action should not be taken. Sections 73 and 74 cover tax not paid or short paid, erroneous refunds, and input tax credit (ITC) wrongly availed or utilised, but they apply to different alleged reasons. The exact section named in the notice is therefore a starting point for understanding the case, not a detail to skip. Read the notice with its attachments and check whether it concerns a demand determination or a different GST procedure.
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The notice is a proposal, not the adjudication order. The authority must consider the reply and any hearing that is applicable before deciding the matter. Treating the SCN as an already-decided debt can lead to an ill-considered payment; treating it as harmless correspondence can result in an order being made without the company’s position being properly recorded.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchThe CGST Act is the primary statutory reference for sections 73–75. The text and commencement of amendments can change, so the law applicable to the tax period and the notice must be checked rather than assumed from an older copy.
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Section 73 and Section 74 are not interchangeable
Both sections can involve unpaid or short-paid tax, an erroneous refund, or wrongly availed or utilised ITC. The material distinction is the alleged reason for the shortfall.
| Point to compare | Section 73 | Section 74 |
|---|---|---|
| Alleged basis | Reasons other than fraud, wilful misstatement or suppression of facts to evade tax. | Fraud, wilful misstatement or suppression of facts to evade tax is alleged. |
| What to test in the notice | Whether the factual and legal explanation shows why tax was not unpaid or short paid, the refund was not erroneous, or the ITC was not wrongly availed or utilised. | Whether the notice has actually set out facts supporting the more serious allegation, in addition to the underlying tax or credit calculation. |
| Response approach | Reconcile the proposed amount and explain the non-fraud factual and legal position point by point. | Address both the tax calculation and the specific fraud, wilful-misstatement or suppression allegation; preserve evidence showing the transaction history and disclosures. |
This table describes the statutory distinction at a high level. A notice may cite another provision or rule and follow a different process, so do not relabel every GST communication as a section 73 or 74 SCN.
Read the notice before choosing a response
Make a case record as soon as the notice arrives. Capture:
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- the date and method of service;
- the GSTIN and legal name of the recipient;
- the issuing authority and officer, if identified;
- the statutory section or rule cited;
- the tax periods and transactions covered;
- the proposed tax, interest and penalty, with the calculation or annexure;
- the factual allegations and documents relied upon;
- the response deadline, hearing details and filing channel; and
- every attachment, portal reference and acknowledgement already available.
Download the notice and attachments from the GST Portal case record where available, save them in an access-controlled folder, and keep the original service email or other proof of receipt. The date of communication can affect later remedies, so do not rely on a forwarded copy with no service record.
How GST Portal forms fit into the process
The GSTN forms guide identifies several forms used in demand and recovery workflows. Their labels explain the function of a form; they do not guarantee that every notice uses each form or that payment is suitable.
| Form | Portal description or function | What a company should do |
|---|---|---|
| GST DRC-01 | “Summary of Show Cause Notice.” | Use it as a portal summary and compare it with the full notice and attachments. |
| GST DRC-06 | “Reply to the Show Cause Notice.” | File the reply through the workflow actually specified for the company’s notice and retain the acknowledgement. |
| GST DRC-03 | Taxpayer intimation of payment made voluntarily or against an SCN or statement. | Consider only after analysing the provision, figures and consequences; a payment intimation is not a substitute for a defensible reply where liability is disputed. |
| GST DRC-07 | “Summary of the order.” | Distinguish this later order summary from the original SCN and read the underlying order before deciding on a remedy. |
These descriptions come from the GST Forms Available on the GST Common Portal. The guide is not a universal deadline schedule. Follow the particular notice and the current portal workflow.
Step-by-step response process
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Confirm service, scope and deadline
Check when and how the notice was communicated, which GST registration and periods it covers, and whether the deadline is calculated from service or another event. Put the due date and any hearing date on a monitored calendar. If the portal record and a paper or email copy differ, preserve both and seek clarification promptly.
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Build an allegation-to-records reconciliation
Create a row for each allegation or calculation. Map it to the relevant return, invoice, credit ledger, electronic liability register, purchase or sales ledger, bank or payment record, contract, correspondence and earlier submission. Mark each item as admitted, disputed, unsupported by the company’s records, or dependent on a legal interpretation. Do not send a bulk data dump without explaining what each document proves.
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Test the computation
Recalculate the proposed tax and separate tax, interest and penalty. Check tax-period mapping, duplicate invoices, reversals, amendments, credit notes, export or other zero-rated evidence where relevant, and whether the notice has counted a payment or adjustment. Preserve the spreadsheet or working papers so the figures in the reply can be reproduced.
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Analyse the legal ground
Read the cited section, rule and any notification identified in the notice. For a section 73 matter, focus on why the alleged non-payment, short payment, erroneous refund or ITC issue is factually or legally wrong, and quantify any genuinely undisputed amount. For section 74, address the additional allegation of fraud, wilful misstatement or suppression with evidence and a precise explanation; do not answer only the arithmetic.
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Prepare a point-by-point reply
Use the portal reply route identified by the notice. The GSTN guide labels DRC-06 as the reply form, but a different notice type or current workflow may require another channel. Organise the submission with a short executive position, a numbered response matching each allegation, a calculation table, legal grounds, an indexed annexure list and the exact relief requested. State clearly which facts are accepted, which are denied and which cannot be verified from the material supplied.
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Decide whether payment or another procedural step is appropriate
DRC-03 can be used to intimate a voluntary payment or payment against an SCN or statement. Payment may affect the amount in dispute or later consequences, so obtain case-specific advice before using it where liability, classification, ITC eligibility or the alleged conduct is contested. If only part is undisputed, document the basis and treatment of the balance rather than implying that the entire proposal is accepted.
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Request a hearing when useful
Section 75 provides a hearing opportunity when the taxpayer requests one in writing or when an adverse decision is contemplated. Put the request in the reply or in the specified portal field, identify the issues that require oral clarification, and ask for a reasonable date. If more time is genuinely needed, seek an adjournment with reasons and supporting facts; adjournment is subject to the statutory limit and the officer must record reasons.
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File, verify and preserve proof
Upload legible files within the permitted size and format, complete any declaration or digital-signature step, submit, and download the acknowledgement or ARN. Confirm that every annexure opened correctly and that the filed text matches the approved version. Keep a read-only copy of the notice, reply, attachments, payment challans, correspondence and portal status.
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Monitor the case after filing
Check portal messages and communications rather than assuming silence means acceptance. Respond to a lawful request for additional information, attend the hearing if scheduled, and record what was submitted. A later order may adopt, modify or reject the proposed demand; compare it with the SCN because the final decision must be based on the issues and material properly before the authority.
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What makes a reply persuasive
Use an issue matrix
A practical matrix has columns for the notice paragraph, the authority’s assertion, the company’s factual answer, the document proving it, the legal provision, and the relief requested. This prevents a common failure: answering the narrative but leaving one amount or period unexplained.
Explain documents instead of merely attaching them
For each annexure, identify the date, parties, amount and proposition it supports. If a record is unavailable, say why, describe the search made and provide a substitute source or a commitment to produce it if permitted. Redact unrelated personal or commercially sensitive information while leaving the transaction, dates and figures readable.
Separate facts, law and calculation
First establish what happened, then explain why the cited provision does or does not apply, and finally show the arithmetic. A concise reconciliation table is usually clearer than repeating the notice in prose. If an amount is conceded, label it precisely and explain whether interest or any other component remains disputed.
State the requested outcome
Ask for the proposed demand to be dropped where the allegations are unsupported, or for the calculation to be corrected to the amount demonstrated by the records. Request a personal hearing where needed and ask that the submissions and evidence be considered in the order.
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Section 75’s hearing safeguard is relevant when the taxpayer makes a written request or an adverse decision is contemplated. A hearing request should identify the disputed issues and why oral clarification would assist; a generic request sent after the deadline may not protect the company’s position. Where an adjournment is necessary, give a specific reason, propose practical dates and attach evidence such as a key person’s unavoidable absence. The provision permits adjournment for sufficient cause, with reasons recorded, within its statutory limit.
Attend through an authorised representative only where the authorisation and identity requirements are satisfied. Prepare a short speaking note tied to the filed reply, and do not introduce a new factual case casually: submit new documents through the accepted channel and explain their relevance.
What happens after the reply
The authority may close the matter, seek clarification, hold a hearing, or issue an adverse demand order. A portal entry labelled DRC-07 is the summary of the order; it is not the original SCN. Read the full order, its findings, computation, interest and penalty treatment, and the date and method of communication. Check whether the order decided only the issues notified and whether it addressed the company’s material submissions.
If the order is adverse, the GST Portal’s appeal FAQ says an aggrieved taxpayer or unregistered person may appeal to the Appellate Authority within three months of communication. The FAQ describes possible condonation of up to one further month for sufficient cause. This is a procedural explanation, not permission to wait: confirm the current law, the order and the correct appellate route immediately, and calculate the deadline from documented communication.
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Common mistakes and how to correct them
- Assuming the SCN is already final: treat it as the proposed case and use the response to establish the factual and legal record.
- Using a generic “GST notice” template: identify the exact section, rule, period and allegation before selecting a form or argument.
- Missing the deadline while waiting for records: file the strongest complete response available, explain genuinely missing material and seek an extension or adjournment through the specified channel where lawful.
- Answering only the tax amount: section 74 allegations require a response to the asserted fraud, wilful misstatement or suppression as well as the calculation.
- Paying without analysing consequences: DRC-03 records a payment; it does not resolve whether payment is strategically or legally appropriate in the particular case.
- Uploading unreadable or unindexed files: use descriptive filenames, an annexure index and legible scans, then verify the submitted package.
- Ignoring the portal after filing: monitor notices, hearing communications and the order summary, and preserve each acknowledgement.
- Relying on an old rule or form guide: verify amendments, commencement dates and the live portal instructions for the notice’s tax period.
When a company should obtain specialist help
Case-specific advice from an Indian GST practitioner, chartered accountant or tax-litigation lawyer is especially prudent where the proposed amount is material, records conflict, the notice alleges fraud or suppression, ITC eligibility depends on complex supply facts, multiple registrations or periods are combined, or an order has already been served. A professional can also check limitation, statutory prerequisites, computation, hearing rights and appeal strategy. Management should still appoint an internal owner for the deadline, records and factual sign-off; professional advice does not replace accurate company evidence.
Questions a company should resolve immediately
- Which provision and procedure does the notice actually invoke?
- What exact periods, GSTINs, transactions and amounts are included?
- When was the notice legally communicated, and what is the stated response route?
- Which allegations are admitted, disputed or impossible to verify from the supplied material?
- Is a hearing requested in writing, and is an adjournment genuinely necessary?
- Would any proposed payment clarify an undisputed liability, or could it prejudice a disputed case?
- Who will monitor the portal and calculate any later appeal deadline from the order’s communication?
Because GST procedures and forms can be amended, the notice, current portal instructions and law applicable to the relevant period control the company’s case. This explainer cannot determine liability or replace advice on a live dispute.
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