Notices · GST

GST DRC-01 show cause notice: reply format, and how to reply in DRC-06

A DRC-01 is a proposed demand: tax, interest and penalty the department says you owe. Paying early can remove most of the penalty; replying well can remove the demand.

Quick Statutory Answer

Form GST DRC-01 is the summary of a show cause notice proposing tax, interest and penalty under section 73, 74 or 74A of the CGST Act. Reply in Form DRC-06 by the date the notice gives, and ask for a personal hearing. For periods up to 2023-24, paying the tax and interest within 30 days of a section 73 notice removes the penalty; for 2024-25 onwards section 74A gives 60 days.

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At a glance

What For this notice
Sent by The GST proper officer, proposing a demand
Under Sections 73, 74 and 74A, CGST Act 2017; Rule 142, CGST Rules
Reply in Form GST DRC-06, on the GST portal
Deadline The date given in the notice
If ignored A demand order in DRC-07 on the department’s figures, recoverable with interest and penalty

GST DRC-01 reply format

A fill-in format: replace every [bracket] with your own facts and delete what does not apply. Copy it, or download it in Word, free.

From

[Legal name of the business] GSTIN: [GSTIN] [Principal place of business]

Date: [DD/MM/YYYY]

To

The Proper Officer [Designation, e.g. State Tax Officer / Superintendent], [Ward / Circle / Range] [Office address]

Subject: Reply in Form GST DRC-06 to the show cause notice No. [SCN number] dated [date] (summary in Form GST DRC-01, Reference No. [reference number]) issued under section [73 / 74 / 74A] for the period [period]

Respected Sir/Madam,

1. We refer to the above show cause notice proposing a demand of tax of Rs. [amount], interest and penalty for the period [period]. We deny the proposed demand except to the extent specifically admitted below, and file this reply within the time allowed.

Preliminary submissions

2. [Only if applicable: the notice is beyond the time limit for its section / has been issued without jurisdiction / does not state the grounds on which the demand arises. State the objection and the facts that support it.]

Facts

3. [Brief statement of the business, the transactions concerned, and the returns filed for the period.]

Demand 1: [as described in the notice] — Rs. [amount]

4. The notice proposes [summarise]. This is not payable because [reasons — facts first, then the provision relied on, then the documents]. Copies are enclosed as Annexure [ ].

Amounts accepted

5. [If any] We accept Rs. [amount] and have paid it with interest through Form GST DRC-03, ARN [ARN] dated [date], enclosed as Annexure [ ].

Penalty

6. [Why penalty is not attracted — in a section 74 or fraud-limb notice, why there was no fraud, wilful misstatement or suppression of facts, with the supporting facts.]

Prayer

7. We request that the proceedings be dropped, and that we be granted an opportunity of personal hearing under section 75(4) of the CGST Act, 2017 before any order is passed.

Enclosures

Annexure [ ] — Reconciliation for each amount demanded Annexure [ ] — Invoices, payment proof and supplier return status relied on Annexure [ ] — DRC-03 acknowledgements, if any Annexure [ ] — Judgments or circulars relied on

Thanking you, For [Legal name of the business] [Name of authorised signatory] [Designation] Place: [Place]

Why you may have received it

  • A scrutiny (ASMT-10), audit or inspection was not resolved, and the officer now proposes a demand.
  • Input tax credit is said to have been wrongly availed — often because a supplier did not file, or the credit is blocked.
  • Tax is said to be short paid, not paid, or refunded in error.
  • The department alleges fraud, wilful misstatement or suppression of facts, which is what separates section 74 (and the fraud limb of 74A) from the rest.

How to reply, step by step

  • Read which section the notice is issued under and which tax periods it covers. It decides the penalty, the time the department had to issue it, and how long you have to pay without penalty.
  • Check the notice was issued within the time limit for its section and by an officer with jurisdiction. If you answered a DRC-01A intimation on the same demand, keep this reply consistent with that one.
  • Separate what you accept from what you dispute. Pay what you accept through Form DRC-03 with interest; the officer records it in DRC-05.
  • Draft the reply point by point, with the law and the documents for each disputed amount, and file it in Form DRC-06.
  • Ask in writing for a personal hearing. Section 75(4) requires one where you ask for it, or where a decision adverse to you is contemplated.
  • Keep the acknowledgment of the reply and attend the hearing. The order will come in Form DRC-07.

What to attach

  • A reconciliation for each amount the notice demands.
  • Invoices, payment proof and the supplier’s return status, where credit is questioned.
  • Any earlier ASMT-11 reply, audit correspondence or DRC-01A submission on the same point.
  • DRC-03 acknowledgments for anything already paid.
  • Judgments or circulars you rely on, with the relevant paragraph marked.

If you do not reply

  • The officer can decide on the department’s figures alone and issue a demand order in Form DRC-07.
  • An unpaid demand is recoverable under section 79, including from your bank account.
  • The chance to pay without penalty is time-limited: it closes 30 days after a section 73 notice, and 60 days after a section 74A notice.

How to structure the reply

  • Reference: GSTIN, the DRC-01 and show cause notice numbers and dates, the section invoked and the periods covered.
  • Preliminary objections, if any: limitation, jurisdiction, or a notice that does not say why the demand arises.
  • The facts, briefly, in your own order rather than the notice’s.
  • Each demand in turn: the amount, why it is not payable, the law and the documents.
  • Amounts accepted and paid, with DRC-03 references.
  • Why penalty is not attracted — and in a section 74 or fraud-limb notice, why there was no fraud or suppression.
  • A request to drop the proceedings and for a personal hearing under section 75(4).

Common questions

What is the difference between DRC-01A and DRC-01?

DRC-01A is an optional intimation the officer may send before a show cause notice, under Rule 142(1A), inviting you to pay or object in Part B. DRC-01 is the summary of the show cause notice itself, which starts the demand proceedings.

Can I avoid the penalty on a GST show cause notice?

Often, if you pay quickly. For periods up to 2023-24, paying the tax and interest within 30 days of a section 73 notice means no penalty and the proceedings are concluded (section 73(8)); under section 74 the same payment with a 25% penalty concludes them. For 2024-25 onwards section 74A gives 60 days: no penalty in a non-fraud case, 25% in a fraud case.

Am I entitled to a personal hearing?

Yes. Section 75(4) requires an opportunity of hearing where you request it in writing, or where any decision adverse to you is contemplated. Ask for it in your DRC-06 reply.

What if I disagree with the final order?

An appeal lies to the appellate authority in Form APL-01 within three months of the order being communicated, under section 107, on paying the admitted amount and a pre-deposit of 10% of the tax in dispute — or, where the order demands only a penalty, 10% of that penalty.

Other notices

Before you rely on this

An explanation of the rules, not advice on your notice. The date printed on your notice governs, and a demand of any size deserves a CA or an advocate before you reply.