GST Notice Response Playbook

TL;DR

A notice under Section 61, 73, or 74 is a show-cause, not a demand.

A GST notice is not a demand. It is a show-cause inviting your response. The response is filed in FORM GST ASMT-10 (for scrutiny notices under Sections 61, 62, 63, 64) or in FORM GST DRC-06 (for adjudication orders under Sections 73, 74, 76, 122, 125). The response window is typically 15 working days from the date of service, and the response decides 70–80% of the outcome. This post is the practical sequence we use for our clients — what to read first, what to upload, and what mistakes to avoid.

Step 1 — Identify the Notice Type

The notice header will tell you the section of the CGST Act. Match it to one of the five common buckets:

Section	Notice Type	What the department is alleging	Response Form
61	ASMT-10 (Scrutiny)	Mismatch in GSTR-1 / GSTR-3B / GSTR-2B	GST ASMT-10
62	ASMT-10	Non-filer — deemed return filed by department	GST ASMT-10 + new return under Section 62(1)
63	ASMT-10	Provisional assessment — incorrect assessment	GST ASMT-10
73	DRC-01	Tax short-paid (no fraud) — show cause	GST DRC-06
74	DRC-01	Tax short-paid (with fraud / suppression / mis-statement) — show cause	GST DRC-06 + personal hearing

Sections 73 and 74 carry very different consequences. Section 73 has a 3-year limitation (from the due date of the return) and a penalty of 10% of the tax amount or ₹10,000, whichever is higher. Section 74 has a 5-year limitation (extendable by 1 year if not detectable) and a penalty of 100% of the tax amount. The same facts can attract Section 73 or Section 74 depending on whether the department alleges fraud.

Step 2 — Read the Statement of Facts

The notice will list the specific transactions in dispute. Most notices cite invoices, suppliers’ GSTINs, tax periods, and the alleged differential. The statement of facts is the spine of your response — every paragraph of your reply must address a specific fact.

The common triggers

1. Mismatch between GSTR-1 and GSTR-3B. You declared an invoice in GSTR-1, but the tax was not paid in GSTR-3B. The mismatch is auto-detected. Cause: human error, forgotten payment, or a refund adjustment.
2. Mismatch between GSTR-2B and ITC claimed. You claimed ITC in GSTR-3B that does not appear in GSTR-2B. Cause: supplier did not file GSTR-1, or filed after the cut-off, or the supplier’s GSTR-1 had a different taxable value.
3. E-Way Bill mismatch. The e-way bill shows a different HSN code or value than the invoice. Auto-flag.
4. Turnover mismatch with income tax. Your income-tax return shows a turnover 10–20% higher than your GST turnover. The department treats the gap as suppressed turnover.
5. High-risk supplier ITC. Your supplier is in the department’s “risky supplier” list — a shell entity that issues invoices without actual supply. Your ITC claim is denied.
6. Refund mismatch. The refund claimed in GSTR-1 (as exports / inverted duty) was not matched by the refund granted.

Step 3 — Pull the Underlying Documents

For every allegation, pull the documents that prove or disprove the fact. The list is the same for almost every notice:

• Tax invoice — original, with signature / e-invoice IRN.
• E-Way Bill — generated for the consignment.
• GSTR-1 of the relevant period — showing the invoice declared.
• GSTR-3B of the relevant period — showing the tax paid.
• Payment proof — electronic credit ledger statement or challan.
• Reconciliation sheet — for every invoice in dispute, a row showing: invoice number, invoice date, supplier / buyer GSTIN, taxable value, GST amount, GSTR-1 status, GSTR-3B status, payment status.
• Correspondence with the supplier — emails, WhatsApp messages, written notices about the mismatch (if any).
• Stock / receipt evidence — for goods received: GRN (goods receipt note), weighbridge slip, inward register, or physical possession photo.
• Bank statement — for the payment trail to the supplier.

Step 4 — Decide the Response Strategy

You have three options:

1. Pay the differential with interest and accept the demand. Use this when the mismatch is real and minor. The penalty may be waived or compounded if you pay voluntarily and respond before adjudication.
2. Partially accept, partially contest. Use this when the demand includes items that are genuine mistakes and items that are demonstrably wrong. File a detailed response accepting the genuine parts and contesting the rest with documents.
3. Fully contest. Use this when the demand is based on an auto-flag that does not match your books. For example, a Section 61 scrutiny notice on an e-way bill mismatch where the HSN code on the e-way bill was indeed different from the invoice because the goods were re-classified under a more specific code.

Step 5 — File the Response

The response goes to the GST portal under Services → User Services → View Notices and Orders → Reply.

For ASMT-10:

1. Click on the notice.
2. Click Reply.
3. Upload the response as a PDF (typically 5–10 pages with reconciliation tables).
4. Add supporting documents one by one.
5. Sign with DSC / e-Sign / EVC.

For DRC-06:

1. Click on the demand order.
2. Click Reply.
3. Choose the action: pay, contest, or partially pay and contest.
4. Upload the response PDF.
5. Sign.

The response is reviewed by the adjudicating authority. In most cases, the authority asks for a personal hearing. The hearing is your chance to clarify the documents — many demands get reduced or dropped because the personal hearing exposes the actual flow of goods and money.

Step 6 — Attend the Personal Hearing

The personal hearing is scheduled by the authority under Section 75(4) (for Section 74 cases) or by the proper officer’s discretion for Section 73. Attend in person or through a CA / counsel. Bring:

• All documents uploaded in the reply.
• A 5-page summary of the response in print.
• A reconciliation table on a single page.
• Authority letter if represented by a CA / counsel.

The hearing is not adversarial. The authority’s job is to determine the correct tax. Most officers will entertain the reconciliation sheet and reduce the demand where the figures do not match.

Step 7 — If You Disagree with the Adjudication Order

After the adjudication order, you can appeal to the First Appellate Authority under Section 107. The appeal is in Form GST APL-01, filed within 3 months of the order (extendable by 1 month with a delay condonation application). A pre-deposit of 10% of the disputed tax (or ₹25,000, whichever is higher) is required.

The appeal goes to the Commissioner (Appeals) in the state. The next stage is the Appellate Tribunal (GSTAT), then the High Court (under Article 226), and finally the Supreme Court.

Common Mistakes in Notice Responses

1. Generic reply. A templated paragraph saying “the demand is wrong, please drop” with no reconciliation. The authority treats this as non-cooperation.
2. Missing the deadline. The 15-day window is strict. Late responses are not entertained; you lose the right to be heard.
3. Wrong response form. Filing ASMT-10 for a Section 73 / 74 notice. The portal may accept it, but the legal effect is null.
4. Paying the differential into the wrong head. If the demand is for CGST + SGST, paying it all under IGST is a mismatch in the electronic credit ledger that takes another cycle to correct.
5. Not attaching the GSTR-2B. For ITC mismatch notices, the GSTR-2B printout is the most powerful document — it shows whether the supplier filed correctly.

When to Bring a GST Counsel

For Section 74 notices (fraud / suppression allegation), the penalty is 100% of the tax. The difference between a 10% Section 73 penalty and a 100% Section 74 penalty is significant. If the notice is under Section 74, the question of whether fraud is established is a legal determination. We typically involve a GST counsel at this stage.

For Section 73 notices on disputes above ₹10 lakh, a CA-led response is enough.

For Section 61 scrutiny notices, the response can be a self-prepared reconciliation if the data is clean.

The Single Most Important Advice

Treat the first 24 hours as critical. Pull the GSTR-1, GSTR-3B, and GSTR-2B for every period in the notice. Build a single reconciliation sheet mapping each allegation to a row. The reconciliation sheet is the document the authority will use to decide. If the reconciliation is clean, the demand typically drops by 60–80%.

We routinely handle end-to-end notice response for our clients. Share the notice (redacted if you prefer) on WhatsApp — we will tell you whether the demand is contestable, the response that should be filed, and the expected outcome.

For the broader triage on which notices need a counsel, see our GST notices: lawyer vs CA-only guide. For the underlying HSN mismatch trigger that drives most Section 61 notices, see our HSN codes enforcement post.

Sources

• GST Portal — Notices and Orders
• CBIC — CGST Act Sections 61–74, 107
• GST Appellate Tribunal (GSTAT)