Learn to manage and reply to GST demand notices using Form DRC-06. This guide covers step-by-step instructions and legal provisions under Sections 73 & 74.
Under the GST regime, taxpayers are expected to self-assess and pay their taxes. However, if this self-assessment is found to be incorrect, the tax department is authorized to issue a notice. These notices can be triggered by various reasons, including short payment or non-payment of taxes, erroneously claimed refunds, or incorrect utilization of Input Tax Credit (ITC). Such notices are primarily issued under two specific sections of the GST Act:
- Section 73: This section addresses situations where tax has been short-paid, not paid, incorrectly refunded, or ITC has been wrongfully availed or utilized for reasons other than fraud, deliberate misstatement, or suppression of facts.
- Section 74: This section covers similar situations but specifically applies when these discrepancies arise due to fraud, willful misstatement, or the suppression of facts.
Overview of the Adjudication Process
The department issues a notice under Section 73 or 74, along with an electronic summary in Form DRC-01. If the notice pertains to a specific period, the proper officer may also issue a statement detailing the amount payable in Form DRC-02. Taxpayers have distinct courses of action available before and after receiving a Show Cause Notice (SCN), as summarized below:
| Section | Tax, Interest, and Penalty | Action by Taxpayer | Action by Authority |
|---|---|---|---|
| Voluntary payment before issuance of SCN | |||
| Under Section 73 | Tax + Interest | Intimate the Department about voluntary payment in Form DRC-03. | The proper officer will issue an acknowledgment (Form GST DRC–04) accepting the payment. If satisfied, no notice will be issued. |
| Under Section 74 | Tax + Interest + Penalty @ 15% of tax | ||
| Payment within 30 days of issue of SCN | |||
| Under Section 73 | Tax + Interest | Intimate the Department about voluntary payment in Form DRC-03. | If the Authority is satisfied with the reply, proceedings will be dropped via an order in Form DRC-05. Otherwise, a Notice of personal hearing will be issued. |
| Under Section 74 | Tax + Interest + Penalty @ 25% of tax | ||
| Payment after 30 days of issue of SCN but within stipulated time mentioned in SCN | |||
| Under Section 73 | Tax + Interest + Penalty @ 10% of tax or Rs. 10,000 whichever is higher | Reply to the SCN in Form DRC-06 and submit supporting documents. | If the Authority is satisfied with the reply, proceedings will be dropped via Form DRC-05. Otherwise, a Notice of personal hearing will be issued. |
| Under Section 74 | Tax + Interest + Penalty @ 50% of tax |
Time Limits for Adjudicating a Case under Section 73 and Section 74
There are specific timeframes within which cases under these sections must be adjudicated:
- Section 73: The time limit for adjudicating a case is 3 years from the due date of filing the Annual Return related to the demand, or the date of an erroneous refund.
- Section 74: The time limit for adjudicating a case is 5 years from the due date of filing the Annual Return related to the demand, or the date of an erroneous refund.
How to View a Notice on the GST Portal
To view any notices issued to you by the tax authorities on the GST Portal, follow these steps:
Step 1: Log in to the GST Portal.
Step 2: Navigate to Services > User Services > View Additional Notices/Orders > Case Details.
Step 3: After clicking “View additional notices,” you will see a list of all notices and orders issued by the Department. Click “View” to access the specific Case Details.
Step 4: To view the actual notice document, click on the download link located within the attachments option.
How to Reply to a Notice (DRC-06) on the GST Portal
Once you have viewed the notice, you can proceed to submit your reply using Form DRC-06 on the GST Portal:
Step 1: On the Case Details page, click on the ‘Replies’ tab.
Step 2: Select the ‘Add Reply’ tab and then choose ‘Reply’.
Step 3: Initially, the status of the reply will show ‘Pending for reply by the taxpayer’. This status will change once you submit your response.
Step 4: The reply page will then be displayed, prompting you to enter the necessary information.
Step 5: The reply page will present several fields for completion:
| Fields | Nature |
|---|---|
| Type | These fields will be auto-populated. |
| SCN Ref No. | |
| Date of SCN | |
| Financial Year | |
| Personal hearing requirement | The taxpayer has to choose ‘Yes’ or ‘No’. This tab appears only if the Issuing Authority has not already called for a personal hearing in the issued notice. |
| Reply | Enter details of the reply. |
| Attachment | Select the necessary attachment. |
| Verification | Select the declaration check-box, the name of the authorized signatory, and place. |
Step 6: Click Preview to view the reply. If satisfied, click on ‘File’.
Step 7: The ‘Submit Application’ page will be displayed. A taxpayer can choose to file with DSC (Digital Signature Certificate) or EVC (Electronic Verification Code).
a. File with DSC: Browse for your certificate and click the ‘sign’ button.
b. File with EVC: An OTP (One-Time Password) will be sent to your registered mobile number and email ID. Upon validating the OTP, a success message will be received, along with an ARN (Application Reference Number).
Step 8: The Notices and Orders page will be displayed. Click on the link to download the filed reply, and then click ‘Ok’.
Step 9: The Case Details page will update, and the status of your reply will change to ‘Reply furnished, pending for order by tax official.’
How to View an Order Issued by a Tax Official
To view orders issued by a tax official against your case, follow these steps:
Step 1: Click on the ‘Orders’ tab within the case details page.
Step 2: All orders issued concerning the taxpayer will be displayed here.
Step 3: Click on the link under the attachments section to view the specific order document.
Frequently Asked Questions
- After an order is issued, is a separate recovery notice also issued? No, the order itself serves as the recovery notice.
- How are payments of tax, interest, and penalty made before a notice, and which form is used? You can find more information about making such payments before a notice is issued in Form DRC-03.
- What are the different modes of recovery under GST? Details on the various recovery modes under GST can be found in the Demands and Recovery procedure.
- Can a GST order be rectified? Yes, any apparent mistakes on the record can be rectified within 6 months from the order’s issue date. This rectification is performed by a proper officer using Form DRC-08.
- Is it possible to pay tax dues in installments? Yes, tax payments can be made in installments. Further details are available here.
