Common GST Notices & How to Respond to Them

Running a business under GST comes with compliance requirements like filing returns, paying taxes, and maintaining proper records. However, even after being compliant, many taxpayers receive GST notices from the tax department. These notices can be due to mismatches, late filings, excess ITC claims, or other reasons.

If you’ve ever received a GST notice, don’t panic. In this blog, we will explain the common types of GST notices, reasons why they are issued, and how to respond to them effectively to avoid penalties and legal issues.

What is a GST Notice?

A GST notice is a formal communication from the GST department sent to taxpayers to seek clarification, request additional documents, or demand tax payments. These notices are issued electronically via the GST portal and can also be delivered physically.

The main purpose of GST notices is to ensure compliance and curb tax evasion by identifying discrepancies in returns, payments, or transactions.

Common Types of GST Notices

Here are the most common notices issued under GST along with their meaning and purpose:

📌 1. Notice for Scrutiny of Return – Form GST ASMT-10

Reason: Mismatch between GSTR-1, GSTR-3B, and GSTR-2B data or discrepancies between GST returns and e-way bills.
Action: Taxpayer must reply in Form ASMT-11 within the time specified, explaining the differences or making payment if required.

📌 2. Show Cause Notice (SCN) – Form GST DRC-01

Reason: Non-payment, short payment, wrong ITC claim, or fraud.
Action: Submit a reply within 30 days through Form GST DRC-06 along with supporting documents.

📌 3. Notice for Annual Return Non-Filing – GSTR-9

Reason: Failure to file annual return (GSTR-9) or reconciliation statement (GSTR-9C).
Action: File pending returns immediately to avoid late fees and penalties.

📌 4. Demand Notice – Form GST DRC-07

Reason: When tax demand is finalized after adjudication proceedings.
Action: Pay the tax amount mentioned or file an appeal within 3 months.

📌 5. Notice for Non-Filing of GST Returns

Reason: Non-filing of GSTR-3B or GSTR-1 for a certain period.
Action: File pending returns immediately to avoid cancellation of GST registration.

📌 6. Notice for Cancellation of Registration – Form GST REG-17

Reason: Continuous non-filing of returns, incorrect information during registration, or violation of GST rules.
Action: Reply in Form REG-18 within 7 working days to avoid cancellation.

📌 7. Notice under Anti-Profiteering Provisions

Reason: Not passing on GST rate cuts or ITC benefits to customers.
Action: Submit cost sheet and pricing details to prove compliance.

How to Respond to GST Notices – Step-by-Step

✅ Step 1: Read the Notice Carefully

Check the form number, section reference, reason for notice, and due date for response.
Log in to the GST portal to verify the notice.

✅ Step 2: Collect Data & Documents

Download GST returns, invoices, purchase register, e-way bills, and reconciliation statements related to the notice period.

✅ Step 3: Reconcile and Identify Errors

Match GSTR-1, GSTR-3B, and books of accounts.
Identify mismatches, if any, and calculate tax liability accurately.

✅ Step 4: Prepare Reply

Draft a professional response using the appropriate form (ASMT-11, DRC-06, REG-18).
Attach supporting documents, reconciliation statements, and payment challans (if additional tax is payable).

✅ Step 5: Submit Reply Online

✅ Step 6: Keep Acknowledgment

Download the acknowledgment for future reference.
If unsatisfied with the order, file an appeal within the time limit.

Consequences of Not Responding

Ignoring a GST notice can lead to:

Penalties & Interest: 10% of tax due (minimum ₹10,000) or 100% in case of fraud.
Tax Demand Orders: Recovery proceedings may be initiated.
Blocking of ITC: Input Tax Credit may be restricted.
Cancellation of GST Registration: For continuous non-compliance.
Legal Action: Prosecution in case of willful fraud.

Best Practices to Avoid GST Notices

File GST returns on time (GSTR-1, GSTR-3B, GSTR-9).
Reconcile data monthly to detect mismatches early.
Maintain proper documentation of invoices, ITC claims, and e-way bills.
Pay correct taxes and avoid excess ITC claims.
Use GST-compliant software for accurate record-keeping.

Conclusion

Receiving a GST notice is not always a reason to worry, but it must be addressed promptly and accurately. By understanding the type of notice, reconciling your records, and replying within the due date, you can avoid penalties and legal consequences.

Pro Tip: If the notice involves complex issues, consult a GST expert or Chartered Accountant to draft a strong and professional reply.