Executive summary
A GST notice is not a final demand — it is the start of a process you can still shape. What you do in the first 48 hours matters more than almost anything that follows.
- A notice (including Form DRC-01) is a show cause notice, not a demand order — you have the right to respond before anything is confirmed.
- From FY 2024-25 onwards, Sections 73 and 74 have been unified into Section 74A — most existing guides online still describe the old split system.
- The standard response window is 30 days, filed as Form DRC-06 on the GST portal.
- Ignoring a notice does not make it go away — it leads to an ex-parte order (DRC-07) confirming the demand in full.
- Voluntary payment before the order (via Form DRC-03) substantially reduces or eliminates penalty exposure.
- The GST Appellate Tribunal (GSTAT) became operational in September 2025 after 8 years of non-existence — appeals that had nowhere to go now do.
- A backlog appeal deadline of 30 June 2026 applies to orders communicated before 1 April 2026 — if you have an old unresolved order, this deadline is urgent.
The first 48 hours
Before anything else — read the notice fully, identify what it actually says, and start the clock correctly. Most damage in notice cases comes from delay or misreading, not from the underlying facts.
Confirm it's genuine
Log into the GST portal directly (never through a link in an email or SMS) and check Services → User Services → View Additional Notices/Orders. If it isn't there, it may not be authentic — see Section 8.
Identify the section and form
Is it Form DRC-01 (formal show cause notice) or an earlier-stage query (like ASMT-10)? Is it issued under Section 73, 74, or the newer unified Section 74A? This determines your entire strategy — see Section 2.
Calculate the real deadline
Note the exact date of issue and the response period stated (commonly 30 days). Do not rely on memory — write the deadline down and set multiple reminders.
Gather your records immediately
Registration certificate, GSTR-5A filings for the period in question, invoices, customer location evidence, and bank/payment processor records. Assembling these early, before drafting a response, saves critical time later.
Get a rough sense of scale
Before your first call with anyone, our penalty and exposure calculator can give you a quick, indicative estimate of what's potentially at stake — useful context going into any conversation, though not a substitute for a specific assessment of your actual notice.
Get specialist input before you respond
A rushed or generic reply is worse than a short delay to get it right. If you're going to engage help, do it now — not on day 28 of a 30-day window.
Notice types & the Section 74A unification
Which provision your notice cites changes your entire response strategy — and the rules changed materially from FY 2024-25 onwards.
Before FY 2024-25: the Section 73 / Section 74 split
Historically, demand notices fell into two categories with very different consequences:
| Provision | Applies to | Penalty if upheld |
|---|---|---|
| Section 73 | Non-fraud cases — genuine errors, short payment without intent to evade | Up to 10% of tax or ₹10,000, whichever higher |
| Section 74 | Fraud, wilful misstatement, or suppression of facts | Up to 100% of tax |
From FY 2024-25 onwards: Section 74A
Form DRC-01: the show cause notice itself
Form DRC-01 is the standardised show cause notice format the officer uses to communicate a proposed demand — it is not itself a section of law, but the form through which Section 73, 74, or 74A notices are issued. It sets out the grounds, the period, and the amount the department believes is owed, and requires you to "show cause" why the demand should not be confirmed.
Earlier-stage notices you may see first
Not every notice is a full DRC-01. Scrutiny notices like Form ASMT-10 (return scrutiny query) often arrive first, flagging a discrepancy and inviting an explanation before any formal demand is proposed. Responding fully and promptly at the ASMT-10 stage is frequently the best chance to resolve a matter before it escalates into a DRC-01.
Identify whether your notice is a preliminary query (ASMT-10) or a formal show cause notice (DRC-01), and whether it falls under the old Section 73/74 split or the new unified Section 74A. This single fact drives your entire response strategy.
The response clock
Every notice comes with a deadline, and missing it is the single most damaging mistake you can make — worse than a weak substantive argument.
| Stage | Typical timeline |
|---|---|
| Reply to Show Cause Notice (Form DRC-06) | Generally 30 days from issue, occasionally shorter for specific automated ITC-mismatch triggers — read your notice's stated deadline exactly |
| Voluntary payment for reduced/no penalty | Within 30 days of the notice, before the order is passed |
| First appeal (Section 107, Commissioner Appeals) | 3 months from the date the order is communicated, with limited condonation of delay |
| Second appeal (Section 112, GSTAT) | 3 months from the First Appellate Authority's order, plus up to 1 month condonable delay |
| GSTAT backlog appeals (orders before 1 April 2026) | 30 June 2026 — a hard outer deadline |
How to respond: Form DRC-06
Your reply to a show cause notice is filed as Form DRC-06 on the GST portal. A complete, well-evidenced reply at this stage is your best and cheapest opportunity to resolve the matter.
Verify the procedural basics first
Is the notice within the limitation period? Was it issued by an officer with proper jurisdiction over your registration? Is the section correctly invoked? Procedural defects are legitimate, preliminary grounds — raise them even while addressing the substance.
Address every ground raised, specifically
A generic denial is treated as no reply at all. For each allegation in the notice, respond with the specific facts, figures, and reconciliation that address it directly.
For OIDAR-specific fact patterns, lead with your classification evidence
If the dispute concerns B2C vs B2B classification, place-of-supply determination, or NTOR status, your strongest evidence is the location-indicator data you should already be logging — GSTIN validation records, IP/billing/card-issuance data, and your reverse-charge documentation for B2B customers.
Attach full supporting documentation
GSTR-5A filings for the period, transaction-level records, customer classification evidence, and any correspondence relevant to the dispute.
Request a personal hearing
This is your statutory right under Section 75(4) and gives you the opportunity to present arguments orally, not just on paper — always exercise it.
File and retain proof
Submit Form DRC-06 through the portal and keep the acknowledgement (ARN). This is your evidence that a timely, complete reply was filed if the matter is disputed later.
Voluntary payment: Form DRC-03
Not every notice needs to be fought. Sometimes the fastest, cheapest path is to pay the undisputed portion voluntarily — and the law rewards doing so quickly. If you haven't received a notice yet but suspect you have a compliance gap, see our Voluntary Registration guide instead — acting before a notice arrives is a meaningfully different, and generally better-positioned, scenario.
| Scenario | Outcome if paid within 30 days of notice |
|---|---|
| Non-fraud grounds | Pay tax + interest; proceedings can be deemed concluded with minimal or no penalty |
| Fraud/suppression grounds | Pay tax + interest + reduced penalty (significantly lower than the penalty that applies after an order is passed) |
If you miss the deadline
Missing the response window doesn't erase the notice — it removes your ability to shape the outcome.
- Ex-parte order. The officer proceeds to decide the matter without your input and issues Form DRC-07 — a summary of the final demand order, confirming the amount in full.
- The demand becomes enforceable. Once DRC-07 is issued, the department can move to recovery — including, under Section 83, provisional attachment of bank accounts where the department believes it necessary to protect revenue.
- Return-filing restrictions. In certain automated ITC-mismatch scenarios, failing to respond can trigger blocking of further GSTR filings until resolved.
- Your options narrow, but don't disappear. A missed SCN deadline does not automatically confirm the demand forever — you can still appeal an ex-parte order through the same Section 107 → GSTAT → High Court ladder — but you are now arguing from a materially weaker position, and the grounds for reversing an ex-parte order are narrower than responding on time would have been.
The appeals ladder & the newly operational GSTAT
For the first eight years of GST, this section would have ended in a dead end. That changed in September 2025 — and it materially improves your options if you're disputing a demand.
The complete appellate structure
| Stage | Forum | Deadline | Pre-deposit |
|---|---|---|---|
| 1 | Adjudicating Authority (Section 73/74/74A) — original order | — | — |
| 2 | First Appellate Authority — Commissioner (Appeals), Section 107 | 3 months from order, condonable | 10% of disputed tax |
| 3 | GST Appellate Tribunal (GSTAT) — Section 112 | 3 months from First Appeal order, +1 month condonable | Additional 10% (20% cumulative), capped at ₹20 crore CGST/SGST each |
| 4 | High Court — Section 117 (questions of law only) | Per Court rules | — |
| 5 | Supreme Court — Section 118 | Per Court rules | — |
Practical mechanics for a foreign company
- All GSTAT filings are electronic — appellant details, the impugned order, demand breakdown, and grounds of appeal are all uploaded as PDFs (20 MB limit per file)
- Pre-deposit must be paid through the Electronic Cash Ledger only — input tax credit cannot be used to satisfy it
- Appeals below ₹50,000 in total dispute cannot be admitted at GSTAT — the First Appellate Authority's order is final for such amounts within the GST system (a High Court writ remains theoretically available)
- Hearings can be conducted virtually with the Tribunal's permission — relevant given most foreign OIDAR suppliers have no physical presence in India
The appellate path is now genuinely three-tier and functional: Commissioner Appeals → GSTAT → High Court/Supreme Court. If you have any unresolved adverse order from the last eight years, check the 30 June 2026 backlog deadline immediately — this is a closing window, not an ongoing one.
Is this notice even real?
Fraudulent "GST notice" emails and messages targeting foreign businesses are common. Before you panic — or pay anything — verify.
- Genuine notices always appear on the GST portal. Log in directly (typing the URL yourself, never clicking an emailed link) and check Services → User Services → View Additional Notices/Orders. If it isn't there, treat the communication as suspect.
- The department will never ask for payment to a personal bank account, UPI ID, or via gift cards. All genuine GST payments go through the official Electronic Cash Ledger on the portal.
- Every genuine notice has a reference number (ARN) that is independently searchable on the GST portal.
- Urgency and threats within hours, not days, are a red flag. Even the shortest genuine response windows are measured in days, not hours.
Emergency checklist
Print this, or keep it open in another tab, the moment a notice arrives.
- Verify the notice is genuine directly on the GST portal
- Identify the form (ASMT-10, DRC-01) and the section (73, 74, or 74A)
- Calculate and write down the exact response deadline
- Gather registration, GSTR-5A filings, invoices, and location-evidence records for the period in question
- Engage specialist input before drafting any response
- Decide whether to contest, pay voluntarily (DRC-03), or both in part
- Draft a complete, specific reply addressing every ground raised
- Request a personal hearing under Section 75(4)
- File Form DRC-06 through the portal and retain the ARN acknowledgement
- Check whether it was communicated before 1 April 2026
- If so, note the 30 June 2026 GSTAT backlog appeal deadline immediately
- Prepare pre-deposit funding (20% cumulative, cash ledger only) well ahead of filing
Glossary
A finance leader with over three decades in taxation, corporate governance, and cross-border advisory. Former Independent Director of Steel Authority of India (SAIL), a Maharatna PSU, and Independent Director of CSL Finance Limited, a listed NBFC. Read full profile →
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