GST DRC-01 Show Cause Notice: Meaning, Reply Process and Documents

GST DRC-01 commonly appears in demand proceedings as a summary of the show cause notice. The taxpayer should not respond only from the summary screen. The full notice, annexures, tax period, section and demand computation must be reviewed.

For support, see GST Services.

What DRC-01 means

FORM GST DRC-01 is linked to demand and recovery proceedings. It typically summarises the proposed demand of tax, interest and penalty. The detailed show cause notice explains allegations and basis of demand.

The law applicable to a case depends on the tax period and demand provision. Do not assume Section 73/74 treatment is identical for all periods, especially after the insertion of Section 74A.

Which demand provision applies by tax period?

As reviewed in July 2026, the demand provision should be checked period-wise:

The GST portal/forms may involve DRC-01 for summary of notice, DRC-01A where pre-notice intimation is issued, and DRC-07 for summary of order. The full notice, annexures and order should always be read along with the form summary.

Common reasons for GST SCN

• ITC mismatch or ineligible ITC;
• GSTR-1 vs GSTR-3B turnover difference;
• tax short paid or not paid;
• wrong classification/rate;
• e-way bill or e-invoice issues;
• mismatch with supplier data;
• reverse-charge liability;
• excess refund or wrong refund claim;
• non-response to earlier scrutiny/audit notice.

Documents to prepare

• DRC-01 summary and full SCN;
• GSTR-1, GSTR-3B and annual return data;
• purchase register and supplier invoices;
• ITC ledger and reconciliation;
• e-way bill/e-invoice data, where relevant;
• payment challans and electronic ledgers;
• correspondence and earlier replies;
• books of account and tax working.

Reply process

1. Identify tax period and whether the matter falls under Section 73, Section 74 or Section 74A.
2. Match demand computation with return data.
3. Reconcile ITC, turnover and tax payments.
4. Separate accepted, partly accepted and disputed amounts.
5. Prepare a point-wise written reply.
6. Attach evidence in a structured manner.
7. Attend personal hearing if offered/required.
8. Review the order carefully after issuance.

Payment and penalty

GST provisions may provide different consequences for payment before notice, after notice or after order, depending on the section, tax period and facts. Because provisions vary by tax period and by whether fraud/suppression allegations are involved, penalty impact should be reviewed before making assumptions. Do not apply a single universal penalty percentage to every DRC-01 matter.

Use the GST Interest Calculator only for broad interest estimation. The exact rate and period must be verified.

Appeal basics

If an adverse order is passed, appeal may be considered within the prescribed time and procedure. Appeal does not automatically resolve recovery or pre-deposit questions; those must be reviewed separately. For order-stage review, read GST Demand Order Received: Payment, Rectification or Appeal?.

Official references

• CGST Act, CBIC
• GST assessment/audit rules, CBIC
• GST Council agenda on Section 74A and DRC forms

This article is reviewed in July 2026 and is general information. GST demand provisions are period-specific and fact-specific.