What is a GST Notice? Reasons, Types & How to Reply

A GST notice is an official communication from the tax department, usually sent when there are errors, delays, or mismatches in your GST filings. It may sound serious, but in most cases, it’s just the department’s way of asking for clarification or correction. Knowing the different types of GST notices, the time limits to respond, and how to reply can help you avoid penalties and keep your business compliant. In this article, we will explain what a GST notice is, why it is issued, the different types of notices, the time limits to respond, and how you can effectively reply.

Latest Update (23rd July 2024)

In the Union Budget 2024, the Finance Minister proposed the insertion of Section 74A in the CGST Act to introduce a common time limit for issuing demand notices and orders for FY 2024-25 onwards. This applies to both cases involving fraud, suppression of facts, or willful misstatement, as well as cases without such charges. Additionally, the time limit for taxpayers to avail the benefit of a reduced penalty—by paying the tax demanded along with interest—has been extended from 30 days to 60 days. These changes will take effect once notified by the CBIC.

What is a Notice under GST

A notice under GST is an official communication issued by the GST authorities to taxpayers, either to remind or caution them about non-compliance or to seek additional information. Such notices may arise when goods or services are supplied without being taxed, when a taxpayer’s activities appear suspicious, or based on discrepancies found during verification of GST returns or reports from other departments and third parties. 

Depending on the case, a notice may be termed a show cause notice (SCN), scrutiny notice, or demand notice. Common reasons for receiving such notices include failure to register under GST when required, non-filing or delay in filing returns, non-payment or short payment of tax, or excess claims of Input Tax Credit (ITC). 

Taxpayers must respond within the prescribed time limit, as failure to do so may be treated as willful default, attracting penalties, prosecution, or other legal consequences. 

Most Common Reasons for GST Notices

Taxpayers may receive notices under GST when authorities detect discrepancies, non-compliance, or defaults in their GST filings or operations. The most common reasons for these notices include:

• Mismatch in reported details: Between GSTR-1 and GSTR-3B, leading to scrutiny notices.
• Differences in ITC claims: Between GSTR-3B and GSTR-2A/2B.
• Delayed filing of returns: GSTR-1 and GSTR-3B not filed consecutively for more than six months.
• Inconsistent declarations: Between GSTR-1 and the e-way bill portal.
• Profiteering: Non-reduction of prices following GST rate reductions, resulting in failure to pass benefits to consumers.
• Non-payment or short payment of tax: With or without intent to defraud, leading to Show Cause Notices (SCN).
• Wrongful GST refunds: Issued with or without intent to defraud, triggering SCN.
• Incorrect availment or utilization of ITC.
• Failure to register under GST: Despite being liable, and not discharging tax or other liabilities.
• Export reporting inconsistencies: Between GSTR-1 and ICEGATE records (e.g., Shipping Bills or Bills of Export).
• Non-furnishing of information or records: Required to be maintained by the taxpayer.
• Audit-related issues: Non-compliance during tax authority audits.
• Failure to submit information returns: Within the prescribed time limits. 

Types of Notices under GST Law 

This is a quick guide to the various types of notices that taxpayers may receive under GST, the actions required in response, the time limits to reply, and the consequences of non-compliance:

GSTR-3A – Notice to non-filers of GST returns

This notice is issued to taxpayers who have not filed their GST returns in GSTR-1, GSTR-3B, GSTR-4, or GSTR-8. 

• The taxpayer is required to file the pending returns along with any applicable late fees and interest on the outstanding GST liability. 
• The response must be submitted within 15 days from the date of receipt of the notice. 
• Failure to respond may result in the tax being assessed on a best judgment basis using available information, along with a penalty of Rs. 10,000 or 10% of the tax due, whichever is higher.

Click here to know more about  GSTR-3A

CMP-05 – Show Cause Notice

This is a show-cause notice issued to question a taxpayer’s eligibility for the composition scheme. The taxpayer must justify the reasons for continuing under the composition scheme. The response must be submitted within 15 days of receiving the notice. Failure to respond may lead to a penalty under Section 122 and issuance of an order in CMP-07 denying the benefits of the composition scheme.

REG-03 – Notice during GST registration verification or amendment

This notice is issued during the verification of a GST registration application to seek clarifications or request additional documents. It is also used for notices related to amendments in GST registration. 

• The taxpayer must respond by submitting a reply in REG-04 with the required clarifications or information. 
• The response should be made within 7 working days from the date of receipt. Failure to respond may result in the rejection of the application, with the applicant being informed electronically through REG-05.

REG-17 – Show Cause Notice for Cancellation of GST Registration

This is a show cause notice issued to a taxpayer asking why their GST registration should not be cancelled for the reasons specified in the notice. 

• The taxpayer must respond by submitting a reply in REG-18 with the reasons for non-cancellation. 
• The response should be made within 7 working days from the date of receipt of the notice. 
• Failure to respond may result in the cancellation of GST registration, communicated through REG-19.

REG-23 – Show Cause Notice for Revocation of GST Registration Cancellation

This is a show-cause notice issued to a taxpayer asking why the cancellation of their GST registration should be revoked for the reasons specified in the notice. The taxpayer must respond by submitting a reply in REG-24. The response should be made within 7 working days from the date of receipt of the notice. Timely compliance may lead to the revocation of the GST registration cancellation.

REG-27 – Notice Related to GST Migration for VAT Taxpayers

This notice is issued to taxpayers migrating from the VAT regime to GST when they fail to apply after obtaining provisional registration or do not provide correct or complete details. The taxpayer must respond by submitting an application in REG-26 and appear before the tax authority to provide a reasonable opportunity to be heard. No specific time limit is prescribed for the response. Failure to comply may result in the cancellation of provisional registration, communicated through REG-28. 

PCT-03 – Show Cause Notice for Misconduct by GST Practitioner

This notice is issued to a GST practitioner in cases of misconduct. The practitioner must reply within the time prescribed in the show cause notice. Failure to respond may result in the cancellation of the GST practitioner’s license.

RFD-08 – Show Cause Notice for Rejection of GST Refund

This notice is issued to a taxpayer asking why the GST refund should not be rejected. The taxpayer must respond by submitting a reply in RFD-09. The response should be made within 15 days of receiving the notice. Failure to respond may lead to the rejection of the GST refund application, communicated through RFD-06.

ASMT-02 – Notice for Seeking Additional Information for Provisional Assessment

This notice is issued to a taxpayer to seek additional information or documents for a provisional assessment under GST. 

• The taxpayer must respond by submitting a reply in ASMT-03 along with the required documents. The response should be made within 15 days from the date of service of the notice. 
• Failure to respond may result in the rejection of the application for provisional assessment.

ASMT-06 – Notice for Seeking Additional Information for Final Assessment

This notice is issued to a taxpayer to seek additional information or documents for final assessment under GST, specifically for those who had applied for provisional assessment. The taxpayer must respond within 15 days of receiving the notice. Failure to respond may result in the final assessment order (ASMT-07) being passed without considering the taxpayer’s views.

ASMT-10 – Scrutiny Notice for Discrepancies in GST Return

This notice is issued to a taxpayer to inform them of discrepancies detected in their GST return after scrutiny, along with any tax, interest, or other amounts payable in relation to the discrepancy.

• The taxpayer must reply in ASMT-11, providing reasons for the discrepancies in the GST returns. The response should be made within the time prescribed in the notice, or a maximum of 30 days from the date of service, or as otherwise notified. 
• Failure to respond may result in the taxpayer being assessed based on available information, which could lead to prosecution and penalties.

ASMT-14 – Show Cause Notice for Assessment under Section 63

This notice is issued to a taxpayer explaining the reasons for conducting an assessment on a best judgment basis under Section 63. The taxpayer must submit a written reply and appear before the GST authority issuing the notice. The response should be made within 15 days of receiving the notice. Failure to respond may result in the assessment order (ASMT-15) being passed, which may not be in favor of the taxpayer.

ADT-01 – Notice for Conducting Audit under Section 65

This notice is issued to a taxpayer informing them about an audit by the tax authority under Section 65. The taxpayer must attend in person as directed in the notice or produce the required records. The response should be made within the time prescribed in the notice. Failure to comply may lead to the assumption that the taxpayer does not possess the books of accounts, and audit proceedings will be initiated.

RVN-01 – Notice under Section 108 for Revision of Appeals

This notice is issued to a taxpayer by the revisional authority under Section 108 before passing a revision order of appeals, giving the taxpayer an opportunity to be heard.

• The taxpayer must reply within the prescribed time and/or appear before the GST authority on the given date and time.
• The response should be made within 7 working days from the date of service of the notice. Failure to respond may result in the case being decided ex parte based on available records and merits.

Notice of Enquiry by Directorate of Anti-Profiteering

This notice is issued when a supplier has not passed on the benefit of input tax credit (ITC) or reduced GST rates to the recipient/consumer, and the Directorate of Anti-Profiteering initiates proceedings.

• All interested parties receive a notice asking for additional details.
• The recipient must cooperate in the proceedings and provide evidence, if any. The response should be made as specified in the notice. Failure to respond may result in proceedings being conducted ex parte based on available evidence.

DRC-01 – Show Cause Notice for Demand of Tax

This notice is issued for demanding tax that is unpaid or short-paid, with or without intent to defraud, and is served along with a statement of details in DRC-02. The taxpayer must reply in DRC-03 to pay the tax demanded along with interest and applicable penalty. 

The reply can also be made using DRC-06. Note: Where no fraud is involved, the penalty is applicable only if payment is made after 30 days from the notice. The response should be made within 60 days of receipt of the notice. Failure to respond may lead to an order being passed with higher penalty or prosecution, within three years from the due date of annual returns for the relevant financial year.

DRC-10 & DRC-17 – Notice of Auction of Goods under Section 79(1)(b)

This notice is issued for the auction of goods in reference to a demand recovery order under Section 79, either through a specified officer or via execution of a decree. The taxpayer must pay the outstanding demand as per DRC-09. 

• The response should be made as specified in the notice before the auction, noting that the last day for bidding or auction cannot be earlier than 15 days from the date of issue of the notice. 
• Failure to comply may result in the proceedings moving forward to e-auction and sale of goods.

DRC-11 – Notice to the Successful Bidder

This notice is issued to the successful bidder in an auction conducted under GST recovery proceedings. The bidder must pay the full bid amount. The payment should be made within 15 days from the date of the auction. Failure to comply may result in the proper officer conducting a re-auction.

DRC-13 – Notice of Recovery of Outstanding Tax from a Third Person

This notice is issued to recover outstanding tax from a third person liable under the GST law. The recipient must deposit the amount specified in the notice and reply using DRC-14. There is no specific time limit prescribed for the response. Failure to comply may result in the recipient being deemed a defaulter for the specified amount and may be subject to prosecution and penalties.

DRC-16 – Notice for Attachment and Sale of Immovable/Movable Goods or Shares under Section 79

This notice is issued for the attachment and sale of a taxpayer’s immovable or movable goods or shares to recover outstanding GST dues. 

• The taxpayer cannot transfer or create a charge on the specified goods, and any such action will be considered invalid. 
• There is no specific time limit for the response. Contravention of this notice may lead to prosecution and/or penalties.

How to Reply to GST Notices

Replies to GST notices can be submitted online via the GST portal.

• The response must be signed using a digital signature or e-signature of the taxpayer or an authorised representative.
• If the notice involves payment of tax and interest, the liability must be paid in the prescribed form and manner. After payment, the reply letter in the required form should be submitted to the issuing tax authority.
• Taxpayers may authorise another person, such as a chartered accountant, to handle GST notices by issuing a Letter of Authorisation, allowing them to reply and take necessary actions on their behalf. 

Consequences of Not Responding to GST Notices

Failure to respond within the stipulated time can attract penalties and trigger further proceedings under the GST law, depending on the nature of the notice. 

• Penalties – Financial penalties for non-compliance or late responses.
• Interest – Accrued interest on any unpaid taxes.
• Legal Action – Initiation of legal proceedings for non-compliance.
• Cancellation of GST Registration – Possible cancellation of registration.
• Assessment Orders – Authorities may pass ex-parte assessment orders.
• Seizure of Goods/Assets – Goods or assets may be seized for recovery of dues.
• Impact on Business – Negative effects on operations, credibility, and reputation.

How to View Notices on the GST Portal?

The GST portal offers a simple and convenient way for taxpayers to view and respond to notices issued by the authorities. Follow these steps to access your notices online:

• Step 1. Log in: Visit the official GST portal and log in using your username and password.
• Step 2. Go to Dashboard: After logging in, navigate to the Dashboard section.
• Step 3. Open Notices/Orders: Click on the “Notices/Orders” tab to see a list of all notices and orders issued to you.
• Step 4. Select Notice: Choose the specific notice you wish to view. Details such as date of issue, due date for response, and attachments will be visible.
• Step 5. Download Notice: Download the notice for your records and review it carefully.
• Step 6. Submit Response: Respond directly on the portal by uploading the required documents or explanations, based on the type of notice.
• Step 7. Track Status: You can also track the status of your response and any follow-up actions taken by the tax authorities.

Valid Modes of Sending GST Notices

As per Section 169 of the CGST Act, notices under GST are considered valid only if sent through the prescribed modes. Any other method is not legally recognised. The valid modes of communication are:

• Hand delivery directly to the taxpayer or their authorised representative, including via a messenger or courier.
• Registered post, speed post, or courier with acknowledgement, addressed to the taxpayer’s last known business address.
• Email communication to the taxpayer’s registered email address.
• Making the notice available on the GST portal after logging in.
• Publication in a regional newspaper circulating in the taxpayer’s locality, based on their last known residential address.
• Affixing the notice at a prominent place at the taxpayer’s last known place of business or residence. If this is not deemed reasonable, the notice may be affixed on the notice board of the concerned officer’s office as a last resort.

Taxpayers are not required to act on notices received through any mode other than those prescribed under GST law.

Filing Appeals for GST Notices

Receiving a GST notice gives a taxpayer an opportunity to explain their side, submit supporting documents, and provide clarifications. After reviewing the submissions, the tax officer issues a final decision or order.

If the taxpayer disagrees with this decision, they have the right to appeal to a higher authority.

GST Appeal Forms and Their Purposes

Steps for Filing a GST Appeal

If a taxpayer is not satisfied with a GST officer’s order or decision, they can file an appeal online through the GST portal. The process is simple but must be completed carefully within the prescribed time limit to avoid rejection.

• Log in to GST Portal: Access your account using your credentials.
• Navigate to Services: Click on the ‘Services’ section, then go to ‘User Services’ and select ‘My Applications’.
• Select the Correct Form: Choose the appropriate appeal form (e.g., GST APL-01, APL-05, or APL-08) based on your requirement.
• Fill in Required Details: Enter information such as the order number, date, and reason for appeal.
• Upload Documents: Attach the order copy, supporting documents, and a signed verification form.
• Pay Appeal Fee: Complete the payment for submitting the appeal, if applicable.
• Submit the Appeal: Review all entries and submit the appeal online via the GST portal.

Conclusion

GST notices are a vital part of tax compliance, but they don’t have to be overwhelming. Knowing the types of notices, why they are issued, and how to respond on time can save you from penalties, interest, or registration issues. With the GST portal, businesses can easily track, view, and reply to notices, ensuring smooth compliance and peace of mind.

Get Expert Help with GST Notices

Handling GST notices can be stressful, but you don’t have to manage it alone. At IndiaFilings, our experts help you understand, respond, and resolve GST notices quickly—avoiding penalties, interest, and legal hassles. Whether it’s replying to a show-cause notice, filing an appeal, or ensuring smooth GST compliance, we’ve got you covered.

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Further Reading on GST Notices:

• Demand notices under GST & how to respond
• How to Reply GST Notice