In the Goods and Services Tax (GST) regime in India, notices are formal communications issued by the tax authorities (Central or State GST officers) to taxpayers. These notices typically demand an explanation, provide information, request documents, or initiate legal proceedings due to observed discrepancies or non-compliance.

It's crucial for taxpayers to promptly understand, respond to, and comply with GST notices to avoid penalties, legal action, or adverse assessments.

 

Why are GST Notices Issued?

GST notices are typically issued for various reasons, including but not limited to:

• Non-filing or Delayed Filing of Returns: Failure to file GSTR-1, GSTR-3B, or other applicable returns on time.

• Discrepancies in Returns: Mismatches between GSTR-1 and GSTR-3B, or between a taxpayer's GSTR-2B/2A and their ITC claims in GSTR-3B.

• Mismatches with E-way Bills: Inconsistencies between data reported in e-way bills and GST returns.

• Excessive ITC Claims: Unusually high or fraudulent claims of Input Tax Credit.

• Under-declaration of Turnover/Tax Liability: Where the reported turnover or tax paid appears less than what is expected based on available information.

• Non-Compliance with Registration Formalities: Issues during registration, amendment, or cancellation processes.

• Audit or Scrutiny: As part of a routine audit or scrutiny of the taxpayer's records.

• Anti-Profiteering: Failure to pass on the benefit of ITC or reduced GST rates to consumers.

• Fraud or Tax Evasion Suspicions: When authorities suspect fraudulent activities.

• Refund Related Issues: Clarifications or rejection of refund claims.

 

Common Types of GST Notices and Their Forms

GST notices are issued in specific forms prescribed under the GST rules. Here are some of the most common types:

A. Compliance and Information-Related Notices

1. GSTR-3A: Notice to Non-Filers of Returns

   • Purpose: Issued to taxpayers who have failed to file their regular GST returns (GSTR-1, GSTR-3B, GSTR-4, GSTR-8) by the due date.

   • Action Required: File the pending returns along with applicable late fees and interest.

   • Time Limit: Usually within 15 days of receiving the notice.

   • Consequence of Non-Response: Best judgment assessment (tax liability assessed by the officer based on available data) and potential penalties.

2. ASMT-10: Scrutiny Notice for Discrepancies in Returns

   • Purpose: Issued by the proper officer when discrepancies are found during the scrutiny of GST returns and related particulars (e.g., mismatch between GSTR-1 and GSTR-3B, ITC mismatch with GSTR-2B, inconsistencies in tax payments).

   • Action Required: Provide an explanation for the discrepancies or accept the discrepancies and pay the differential tax, interest, and penalty. Reply in FORM GST ASMT-11.

   • Time Limit: Within 30 days from the date of issue of the notice, or as specified. An extension of up to 15 days can be requested.

   • Consequence of Non-Response/Unsatisfactory Reply: Further proceedings may be initiated, such as audit (ADT-01), investigation, or show-cause notice (DRC-01) for demand and recovery.

3. REG-03: Notice for Clarification/Documents for Registration/Amendment

   • Purpose: Issued during the registration or amendment process if the proper officer requires additional information or documents.

   • Action Required: Furnish the required information or documents in FORM GST REG-04.

   • Time Limit: Within 7 working days from the date of service of the notice.

   • Consequence of Non-Response: The application for registration or amendment may be rejected (REG-05).

4. ADT-01: Notice for Conduct of Audit

   • Purpose: Issued to inform a taxpayer that their records will be subjected to an audit by the tax authorities.

   • Action Required: Provide necessary facilities, information, and assistance for the audit. Appear in person or through an authorized representative with the requested documents.

   • Time Limit: At least 15 working days prior to the commencement of the audit.

   • Consequence of Non-Compliance: May lead to adverse findings, show-cause notices, and recovery proceedings.

 

B. Show Cause Notices (SCN)

These are formal notices requiring a taxpayer to "show cause" (explain) why a particular action should not be taken against them, often leading to demand or penalty.

1. DRC-01: Show Cause Notice for Demand of Tax, Interest, and Penalty

   • Purpose: The most common and serious type of SCN. Issued when the tax authorities believe that tax has not been paid, short-paid, erroneously refunded, or Input Tax Credit has been wrongly availed or utilized. This notice outlines the alleged contraventions, the tax amount due, interest, and penalties.

   • Action Required: The taxpayer can:

     • Pay the tax, interest, and applicable penalty mentioned in the notice (often with a reduced penalty if paid within 30 days). Payment can be made using DRC-03.

     • Submit a reply to the SCN in FORM DRC-06, providing justification and supporting documents as to why the demand is incorrect.

   • Time Limit: Response is usually required within 30 days or as specified in the notice.

   • Consequence of Non-Response/Unsatisfactory Reply: The proper officer will issue a final demand order (DRC-07) confirming the demand, interest, and penalty, leading to recovery proceedings.

2. REG-17: Show Cause Notice for Cancellation of GST Registration

   • Purpose: Issued when the proper officer has reasons to believe that a taxpayer's GST registration should be cancelled (e.g., non-filing of returns for consecutive periods, non-commencement of business, fraud).

   • Action Required: File a reply in FORM GST REG-18 explaining why the registration should not be cancelled.

   • Time Limit: Within 7 working days from the date of service of the notice.

   • Consequence of Non-Response/Unsatisfactory Reply: The GST registration will be cancelled by an order in FORM GST REG-19.

3. REG-23: Show Cause Notice for Rejection of Revocation Application

   • Purpose: Issued if the proper officer is not satisfied with a taxpayer's application for revocation of GST registration cancellation (REG-21).

   • Action Required: Submit a reply in FORM GST REG-24 explaining why the revocation application should be accepted.

   • Time Limit: Within 7 working days from the date of service of the notice.

   • Consequence of Non-Response/Unsatisfactory Reply: The application for revocation will be rejected (REG-05), meaning the registration remains cancelled.

4. CMP-05: Show Cause Notice to Composition Dealer for Ineligibility

   • Purpose: Issued if the proper officer believes that a taxpayer opted for the Composition Scheme even though they were not eligible, or subsequently became ineligible.

   • Action Required: Provide an explanation in reply to the notice justifying their eligibility or acknowledging the ineligibility.

   • Time Limit: Within 15 days of receiving the notice.

   • Consequence of Non-Compliance: The taxpayer may be removed from the Composition Scheme and penalized (CMP-07).

 

C. Other Important Notices

• RFD-08: Show Cause Notice for Refund Claim Deficiency

  • Purpose: Issued when a refund claim has issues or discrepancies, requesting the taxpayer to provide supporting documents or clarifications to validate the claim.

  • Action Required: Respond with clarifications/documents in FORM RFD-09.

  • Time Limit: Within 15 days.

  • Consequence of Non-Response: The refund application may be rejected (RFD-06).

• DRC-07: Order for Demand of Tax, Interest, and Penalty

  • Purpose: This is not a "notice" in the traditional sense but an "order" issued after the adjudication of a DRC-01 SCN. It confirms the final amount of tax, interest, and penalty payable by the taxpayer.

  • Action Required: Pay the confirmed demand.

  • Consequence of Non-Payment: Recovery proceedings will be initiated.

• DRC-09 / DRC-10 / DRC-13 / DRC-16: These are various forms used during the demand and recovery process to recover outstanding tax dues. They may include notices for deduction from funds, attachment and sale of goods/property, or recovery from third parties (debtors).

 

How to Check and Respond to GST Notices Online

1. Check on GST Portal:

   • Log in to the GST Portal (www.gst.gov.in).

   • Navigate to Services > User Services > View Notices and Orders.

   • All notices and orders issued by the tax authorities to your GSTIN will be displayed here. You can download them.

   • Additionally, you might receive SMS or email alerts to your registered contact details.

2. Responding to a Notice:

   • For most notices (especially SCNs and scrutiny notices), there will be an option to REPLY from the same View Notices and Orders section on the portal.

   • Click on the specific notice and then the REPLY button.

   • Fill in the required information, provide a detailed explanation, and upload supporting documents in PDF/JPEG format (within specified size limits).

   • Ensure your reply addresses all points raised in the notice clearly and comprehensively.

   • Submit the reply using DSC or EVC.

   • Keep a record of the ARN generated for your reply.

 

Consequences of Not Responding to a GST Notice

Ignoring a GST notice can lead to severe repercussions:

• Adverse Assessment: The tax officer may proceed to assess your tax liability based on the information available to them (best judgment assessment), which can often be higher than your actual liability, along with heavy penalties and interest.

• Demand and Recovery Proceedings: If a demand is confirmed, the department can initiate various recovery measures, including:

  • Deduction from any refund due to you.

  • Attachment and sale of your movable and immovable property.

  • Recovery from your bank accounts.

  • Recovery from third parties who owe money to you.

• Cancellation of GST Registration: For notices like REG-17 (for non-filing), failure to respond will lead to the cancellation of your GSTIN, making you unable to conduct taxable supplies, issue invoices, or claim ITC.

• Monetary Penalties: Significant financial penalties can be imposed for non-compliance, non-payment, or fraud.

• Interest: Interest at 18% or 24% per annum (depending on the type of default) is levied on the unpaid or short-paid tax from the due date.

• Prosecution: In serious cases of tax evasion or fraud, prosecution proceedings (imprisonment) can be initiated.

• Loss of Business Credibility: Non-compliance can damage your business reputation and affect your ability to conduct B2B transactions.