GST Notices: The Common Forms and How to Respond to Each

The notices you are most likely to see

1. ASMT-10: scrutiny of returns, raising a discrepancy. Reply in Form ASMT-11, within thirty days.

2. DRC-01B: liability in GSTR-3B lower than GSTR-1. Pay or explain within seven days.

3. DRC-01C: input credit claimed in GSTR-3B exceeding GSTR-2B. Reply in Part B within seven days.

4. REG-03: query on a registration application. Reply in REG-04 within seven working days.

5. CMP-05: show cause why composition status should not be denied.

6. DRC-01: show cause notice preceding a demand under Section 73 or 74.

7. GSTR-3A: notice to a non-filer, requiring the return within fifteen days.

Section 73 and Section 74

Section 73 covers cases without fraud, wilful misstatement or suppression. The time limit for an order is three years from the due date of the annual return, and the penalty is ten per cent of tax or ten thousand rupees, whichever is higher — nil if tax and interest are paid before the notice.

Section 74 covers fraud and suppression. The limit extends to five years and the penalty rises to one hundred per cent of tax, reducing to fifteen per cent if paid before the notice and twenty-five per cent if paid within thirty days of it. Which section the department invokes therefore matters enormously, and is itself contestable.

How to respond

Acknowledge within the window even if the full answer takes longer. Reconcile the specific figures named rather than the whole year. Attach the working, not merely the conclusion. Where the discrepancy is real, pay through Form DRC-03 and say so — voluntary payment before a show-cause notice removes or sharply reduces penalty.

Where it is not real, explain the timing or classification difference with the supporting documents attached. Most scrutiny notices close on a clear reconciliation.

The cost of silence

An unanswered DRC-01B becomes recoverable under Section 79 without a show-cause notice, because the GSTR-1 figure is treated as self-assessed and admitted. Unanswered scrutiny escalates to a show-cause notice and then an ex parte order.

Recovery under Section 79 includes attachment of bank accounts, which is generally the point at which the matter becomes urgent for everyone involved.

Frequently asked questions

### How long do I have to reply to a GST notice?

It depends on the form. ASMT-10 scrutiny allows thirty days. DRC-01B and DRC-01C allow only seven. GSTR-3A non-filer notices allow fifteen days. The period is stated on the notice itself and is strictly applied.

### What is the difference between Section 73 and Section 74?

Section 73 applies where there is no fraud or suppression: three-year limitation, ten per cent penalty, nil if paid before the notice. Section 74 applies to fraud and suppression: five-year limitation and one hundred per cent penalty, reduced for early payment.

### Can I pay voluntarily before a notice is issued?

Yes, through Form DRC-03, and it is usually worth doing. Payment of tax and interest before a Section 73 notice removes the penalty entirely. Under Section 74 it reduces the penalty to fifteen per cent.

### What happens if I ignore a GST notice?

The proceeding continues without you. A DRC-01B can become recoverable under Section 79 without further process, and scrutiny escalates to a show-cause notice and an ex parte order. Recovery can include attachment of bank accounts.