GST Notice Under Section 73 or 74: How to Reply?

01 / UNDERSTAND THE NOTICEWhat is the difference between Sections 73 and 74?

Both address unpaid or short-paid tax, erroneous refunds and input tax credit wrongly availed or utilised. The distinction is the alleged reason for the discrepancy. Section 74 requires fraud, wilful misstatement or suppression of facts to evade tax. The reply must address that allegation as well as the tax calculation. [2]

These are CGST provisions. Check the corresponding SGST or UTGST provisions and the separate tax heads in the notice; do not treat a CGST penalty figure as the combined liability. [2]

02 / LEGAL TERMSRelevant statutory definitions

The following are plain-language summaries, not verbatim statutory extracts:

Proper officer - Section 2(91)

The Commissioner or a central tax officer assigned the relevant statutory function. Verify that the issuing and adjudicating officers have the appropriate authority.

Taxable person - Section 2(107)

A person registered, or required to be registered, under Section 22 or Section 24.

Input tax credit - Section 2(63)

Credit of input tax. Its availability depends on the applicable eligibility conditions and restrictions.

Suppression - Explanation 2 to Section 74A

Failure to disclose facts or information required in statutory filings, or failure to provide information requested in writing by the proper officer. This definition now appears in Section 74A; the former Explanation 2 to Section 74 was omitted with effect from 1 November 2024.

Read the definitions with the provision and version applicable to the disputed period. [1]

03 / IDENTIFY THE STAGEDRC-01A, DRC-01 and DRC-06: which form matters?

Do not treat a summary as a substitute for the allegations and reasons in the actual notice. If documents are missing, request them promptly and record how their absence prevents a complete reply. Continue addressing the material already available. [3] [4]

04 / PROTECT THE DEADLINEHow much time is available to reply?

Use the reply date stated in the notice and any valid extension granted by the authority. Do not assume that every Section 73 or 74 notice automatically allows 30 days for a reply. The 30-day concessions discussed below concern payment and closure; they are not a universal reply deadline.

Record the issue date, service details, reply date and hearing date separately. If the period is inadequate or records are unavailable, seek additional time in writing before expiry, giving specific reasons and the time needed. A request by itself does not extend the deadline. File the available response and preserve proof of the request.

Also examine the department's limitation period

The ordinary Section 73 order limit is three years from the annual-return due date for the relevant year, or from the erroneous refund date; the notice must precede the order deadline by at least three months. Under Section 74, the corresponding limits are five years and at least six months. [2] [6]

Prepare a year-wise calculation. Annual-return extensions, special limitation notifications, statutory exclusions, stays and binding court orders can change the result. Do not allege that a notice is time-barred solely by counting three or five years from the end of the financial year.

05 / BUILD YOUR RESPONSEHow to prepare an effective GST notice reply

1. Create a complete notice file. Save the signed notice, DRC-01, annexures, email or portal communication, prior correspondence and any hearing intimation. Check the GSTIN, period, tax heads and issuing authority. Compare the summary figures with the detailed calculation.
2. Make an issue-wise demand sheet. For each allegation, record the notice paragraph, disputed transaction or return figure, proposed tax, interest and penalty. Mark the amount as accepted, disputed or requiring clarification. This prevents an admission on one issue from being read as acceptance of every issue.
3. Reconcile the records. Match GSTR-1, GSTR-3B, the relevant GSTR-2A or GSTR-2B data, annual returns where applicable and the books. Explain timing differences, amendments, credit notes, cancelled documents and amounts already discharged. Reconcile monthly figures as well as annual totals.
4. Answer each allegation with evidence. State the fact, explain why the proposed conclusion is incorrect, identify the applicable provision and cite the precise annexure page. For ITC, organise invoices, receipt-of-goods or service evidence, payment records and eligibility documents. Apply the rules that governed the relevant period.
5. Address Section 74 separately. Identify the particular facts said to show fraud, wilful misstatement or suppression. Explain disclosures already made and the chronology of any correction. Avoid merely saying there was no intention to evade; support the explanation with contemporaneous records.
6. Check interest and penalty independently. Ask for the calculation period, rate and legal basis. For an ITC interest dispute, examine whether the credit was both wrongly availed and utilised, and apply Section 50 and Rule 88B to the actual ledger history. Do not assume interest follows every mismatch automatically.
7. Finish with clear relief. State which demands should be dropped or corrected, identify payments requiring adjustment, and request a personal hearing. Include a signed verification and a numbered annexure index.

CBIC Circular No. 258/04/2026-GST dated 26 October 2026 emphasises evidence-based fraud allegations and reasoned adjudication addressing the taxpayer's submissions. Use it, where applicable, alongside the statute and relevant judgments. [7]

Example: explaining a turnover mismatch

Suppose the notice compares two annual figures and proposes tax on the entire difference. Build a bridge from the first figure to the second: invoice amendments, credit notes, reporting in a later month and any remaining difference. Attach the returns and ledger entries that establish each adjustment. State the tax effect separately; an accounting difference is not, by itself, a complete explanation of GST liability.

06 / EVIDENCE CHECKLISTDocuments to attach to the reply

• Notice and demand reconciliation, with a concise chronology.
• Relevant GSTR-1, GSTR-3B, GSTR-2A or GSTR-2B records and annual-return extracts, where applicable.
• Sales and purchase ledgers, invoices, credit notes, debit notes and relevant contracts.
• Delivery records, e-way bills, goods-receipt records or evidence of services actually received.
• Bank payment records, electronic cash and credit ledgers, challans and earlier DRC-03 references.
• Earlier replies, audit correspondence, refund orders and any order concerning the same issue.
• Issue-specific provisions, notifications, circulars and judgments, with the relevant passages identified.
• Authority letter for the representative and a signed, page-numbered annexure index.

Attach records that prove the points in dispute. A large unindexed bundle makes the defence harder to follow. Use descriptive filenames, readable scans and consistent annexure numbers.

07 / FILE AND CONFIRMHow to file the reply in FORM GST DRC-06

On the official GST portal, locate the notice in the relevant case under Services > User Services > View Additional Notices/Orders. Also check View Notices and Orders where appropriate; the route depends on the proceeding and portal interface.

1. Open the case and download the notice and supporting files.
2. Use the reply facility for that notice, ordinarily through the Replies tab, and select the option to add a reply.
3. Enter the response details and upload the signed detailed reply and indexed annexures within the portal's displayed file limits.
4. Select the personal-hearing option where available and repeat the request in the attached reply.
5. Verify the particulars and submit using DSC or EVC, as applicable.
6. Download the submitted reply and acknowledgement or reference number. Reopen the case to confirm submission and monitor further communications.

Saving a draft is not filing. If a technical failure prevents submission, retain timestamped screenshots, raise a portal grievance and promptly inform the officer with the reply attached through an available official channel. Follow up on portal filing; do not assume an email alone completes the prescribed process. See the GST portal assessment user guides. [5]

08 / PERSONAL HEARINGWhat procedural rights should the reply preserve?

Under Section 75(4), a hearing must be offered if requested in writing or if an adverse decision is contemplated. Section 75(5) permits adjournments for sufficient cause, with recorded reasons, subject to a maximum of three adjournments during the proceedings. These are not three automatic extensions. [6]

Request the relied-upon documents and enough time to respond to them. At the hearing, take a short issue note, the reconciliation and the key annexures. Submit a written record of additional explanations afterwards and retain acknowledgement.

Sections 75(6) and 75(7) require reasons for the decision and prevent confirmation beyond the notice's amounts or on new grounds. If a fraud allegation under Section 74 fails before an appellate authority, tribunal or court, Section 75(2) provides for determination as if the notice were under Section 73; failure of the fraud charge does not automatically erase any underlying tax liability. [6]

09 / PAYMENT OPTIONSCan payment reduce or remove the penalty?

Assess the merits before choosing payment. The following concessions require the prescribed tax, interest and applicable penalty to be paid within the statutory window.

Sources: Sections 73(5)-(11) and 74(5)-(11). The concession periods after notice run from issue, while Section 74(11) runs from communication of the order. [2]

Link any payment to the correct notice, period and tax head. For qualifying post-notice payment, intimate through DRC-03 and retain the DRC-05 closure intimation. Do not treat part-payment as closure of the entire demand. [4]

10 / FY 2024-25 ONWARDWhat changes under Section 74A?

Section 74A uses a common demand provision, while retaining different penalties for fraud and non-fraud cases. Its ordinary notice limit is 42 months from the relevant annual-return due date or erroneous-refund date. The order is ordinarily due within 12 months of notice, with a reasoned extension of up to six months by the competent authority before expiry.

The main post-notice payment windows become 60 days: tax plus interest in non-fraud cases, or tax plus interest plus 25% penalty in fraud cases. Fraud cases also retain the 15% pre-notice concession and a 50% penalty option within 60 days of communication of the order. The self-assessed or collected-tax exception in Section 74A(11) must also be checked. [8]

For a notice spanning different years, prepare a separate statutory analysis for each period. Raise a wrongly invoked section in the reply, while also answering the facts and figures.

11 / ADAPTABLE STRUCTURESample structure for a GST notice reply

This is a drafting framework. Replace every bracketed item with verified facts and remove grounds that do not apply. A final reply must answer the actual notice and annexures.

12 / AFTER ADJUDICATIONWhat if the reply is rejected?

Download the detailed order and DRC-07 immediately. Check whether the authority addressed each submission, allowed a hearing, adjusted payments and confined the decision to the notice. Preserve evidence of the date of communication.

A taxpayer's first appeal under Section 107 is ordinarily due within three months from communication of the order. The Appellate Authority may condone a further month on sufficient cause. Applicable admitted dues and statutory pre-deposit conditions must be met. An informal reconsideration request should not be assumed to suspend the appeal period. [9]

For an apparent clerical or calculation error, assess rectification separately. For a substantive disagreement, prepare grounds of appeal. Consider any specific waiver or relief scheme only after checking its eligibility, payment dates and application deadlines.

Frequently asked questions

Statutory references and source material

Read the applicable Central and State legislation, amendments and notifications together. Official references are provided below for verification.

1. India Code: Central Goods and Services Tax Act, 2017 - consolidated text as on 11 June 2026; definitions and the transition to Section 74A.
2. CBIC statutory text: Section 73 and Section 74 - scope, penalties and payment concessions.
3. CBIC: prescribed GST forms, including DRC-06 and CGST Rules, historical consolidated text. Read Rule 142 with subsequent amendments, including source 4; the older text alone is not the current rule.
4. Notification No. 20/2024-Central Tax dated 8 October 2024 - Rule 142 amendments effective 1 November 2024, including Section 74A and DRC-05.
5. GST portal: assessment user guides and official GST portal - use the current case-specific filing interface.
6. CBIC: CGST Act consolidated as on 1 January 2022 - baseline Sections 73-75; read with the later amendments in sources 1 and 8 and any applicable limitation notifications.
7. Government of Karnataka: official Central and State circulars index - lists CBIC Circular No. 258/04/2026-GST dated 26 October 2026 on demand, adjudication and appeals. A reproduced copy of the CBIC circular (PDF) is also available.
8. Finance (No. 2) Act, 2024, sections 136-139 - amendments to Sections 73-75 and insertion of Section 74A. Also see the updated Act in source 1.
9. CBIC: Section 107, appeals to the Appellate Authority.