GST DRC-01 Notice Received? Reply Process, Deadline & Penalty

Received a GST DRC-01 notice? Download the complete show cause notice and annexures, check the reply deadline printed in your notice, and review each proposed tax, interest and penalty amount. DRC-01 is the summary of the show cause notice; the written reply is generally furnished in FORM GST DRC-06 under Rule 142(4). Do not assume that every notice has the same reply deadline or penalty rate.

Need professional assistance? See GST Notice Reply & Appeals or 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?

Under the CGST Act as amended and reviewed on 17 October 2026, the demand provision must be checked period-wise:

Under Rule 142, DRC-01 is the summary of the show cause notice, DRC-06 is the taxpayer’s reply to the notice, DRC-01A may be used for pre-notice intimation, DRC-03 is used for intimation of payment, and DRC-07 is the summary of an order. Do not confuse DRC-01 with DRC-01C, which concerns specified return/ITC mismatch intimations and has its own response process. Always read the full notice and annexures.

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 addressing each allegation, the relevant statutory provision and the evidence.
6. Prepare the reply in FORM GST DRC-06 under Rule 142(4); use the GST portal where applicable, retain the acknowledgement and verify the accepted filing mode in the circumstances of the case.
7. Request a personal hearing where necessary and attend any hearing fixed by the proper officer; check the notice and applicable statutory requirements.
8. Review the speaking order and DRC-07 summary, if issued, against the submissions and supporting evidence.

DRC-06 reply and personal hearing

A demand show cause notice should be answered allegation-wise, not merely by accepting the amount displayed in DRC-01. Rule 142(4) provides for the reply in FORM GST DRC-06. The form includes a reply field, document uploads and an option relating to personal hearing. Check the actual notice for the response deadline and retain proof of filing or submission.

For an ITC dispute, compare the notice calculation with the relevant GSTR-2A/2B, GSTR-3B, purchase register, tax invoices, amendments, credit notes and reversals. A difference between annual totals does not, by itself, establish that every amount is ineligible. Explain the legal and factual basis of each adjustment, and distinguish timing differences from disputed eligibility.

If an amount is admitted, assess the correct tax, interest and statutory payment/penalty consequences for that tax period before making payment. Do not assume that paying one disputed component automatically disposes of all other components of the notice.

For professional assistance with a notice, scrutiny or appeal, see GST and Income Tax Notice Reply & Appeals or contact our CA office.

Common questions after receiving DRC-01

How many days do I have to reply to a GST DRC-01 notice?

Check the due date stated in the actual show cause notice and portal proceedings. There is no single universal DRC-01 reply period that can safely be applied to every case. Seek an extension through the appropriate channel if justified, rather than allowing the deadline to expire.

How do I file a DRC-06 reply?

Read the complete SCN, prepare a point-wise explanation, attach invoices, reconciliations and payment evidence, and submit FORM GST DRC-06 under Rule 142(4) using the applicable GST proceedings workflow. Retain acknowledgement or other submission proof.

What happens if I do not reply?

The officer may proceed on the available record and pass an adverse order, subject to the applicable law and procedural safeguards. Ignoring a notice can mean losing the opportunity to explain errors or submit evidence before adjudication.

Can I request a personal hearing?

Yes. Request a personal hearing in your response when necessary and check the hearing provisions applicable to your proceedings, including Section 75(4) where applicable. Keep a record of the request and hearing notice.

Can GST demand or penalty be reduced?

A proposed demand can be contested where the computation or legal basis is wrong. Penalty consequences depend on the tax period, section, facts, and timing of any payment. For periods up to FY 2023-24, examine Sections 73 or 74 as applicable; from FY 2024-25, examine Section 74A. Do not treat a Council recommendation as effective law without its operative amendment.

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 Rule 142 amendments (Official Gazette, 2024)
• GST Council: Rule 142 and DRC forms, 54th meeting
• GST Council agenda on Section 74A and DRC forms

This article was reviewed on 17 October 2026 against the amended CGST Act and official GST form/rule references. It is general information; the applicable provision, notification, limitation, interest and penalty must be checked against the relevant tax period and case facts.