Under the GST regime, tax is paid on a self-assessment basis. If the self-assessment is incorrect, the Department can issue a Notice. A Notice can be issued for short payment/non-payment of taxes, claiming an erroneous refund, wrong availment of ITC, etc.
Notices are issued under the 2 sections below:

  1. Section 73 – Deals with tax not paid/short-paid or wrongly refunded, or input tax credit wrongly availed or utilised for any reason other than fraud, willful misstatement or suppression of facts.
  2. Section 74Deals with tax not paid/short-paid or wrongly refunded, or input tax credit wrongly availed or utilised due to fraud, willful misstatement or suppression of facts.

 

Overview of the process of adjudication

A notice can be issued by the Department under Section 73 or Section 74, along with a summary, issued electronically in Form DRC-01. Where such notice has been issued for any period, the proper officer may issue a statement specifying the details of the amount payable in Form DRC-02.
 
Options available to the taxpayer before and after the receipt of a show cause notice (SCN):

Section
Tax, Interest, and Penalty
Action that can be taken by the taxpayer
Action taken by the 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 shall issue an acknowledgement, accepting the payment made by the said person in FORM GST DRC–04, and 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, it will drop the proceedings by the issue an order in Form DRC-05, or else Notice of a personal hearing will be issued.
Under Section 74 Tax+Interest+Penalty @ 25% of tax
Payment after 30 days of issue of SCN but within the 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 documents. If the Authority is satisfied with the reply, it will drop the proceedings by the issue of Form DRC-05, or else Notice of a personal hearing will be issued.
Under Section 74 Tax+Interest+Penalty @ 50% of tax

 

Time Limit for adjudicating the case under Section 73 and Section 74

  • Section 73- Time limit for adjudicating the case is 3 years;
  • Section 74- Time limit for adjudicating the case is 5 years;

from the due date of filing the Annual Return to which the demand relates or the date of erroneous refund.

How to view a Notice on the GST Portal?

Step 1: Log in to the GST Portal.
Step 2: Click on Services>User Services>View Additional Notices/Orders>Case Details.
Step 3: Once the taxpayer clicks on View additional notices, he can see all the Notices/Orders issued by the Department. Click View to see the Case Details.
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Step 4: Click the download link in the attachments option to view the Notice.
 

How to reply to a Notice on the GST Portal (DRC-06)?

 

Step 1: Click on ‘Replies’ on the Case Details page.
Step 2: Click on ‘Add Reply’ tab and select ‘Reply’.
Step 3: The status of the reply is ‘Pending for reply by the taxpayer’ in the below screenshot. But, once the taxpayer adds the reply it will change.

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Step 4: Reply page is displayed:

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Step 5: The following fields will be displayed on the reply page:
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’. But this tab will appear only to taxpayers where Issuing Authority has itself not called for the 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: ‘Submit Application’ page will be displayed. A taxpayer can choose to file with DSC or EVC.

a. File with DSC: Browse the certificate and click on the button ‘sign’.
b. File with EVC: An OTP will be sent to the registered mobile number and email ID. On validation of OTP, a success message will be received along with ARN.

Step 8: Notices and Orders page will be displayed. Click on the link to download the filed reply and then click ‘Ok’

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Step 9: The Case Details page will be displayed but now the status of reply will change to ‘Reply furnished, pending for order by tax official.’

 

How to view an order issued by tax official?

Step 1: Click on the ‘Orders’ tab in the case details page.
Step 2: All the orders issued against the taxpayer will be displayed.
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Step 3: Click on the link under the attachments section to view the order.

Q&A

1. After issuance of an order, should a tax officer issue a recovery notice?
No, as the order itself is treated as a recovery notice.
2. How the payment of tax, interest, and penalty made before issuance of notice and Form used?
You can read more about DRC-03 to know about the payment of tax, interest, etc before the issuance of a Notice.
3. What are the various modes of recovery under GST?
You can read about the Demands and Recovery procedure under GST to know the various modes of recovery.
4. Can an Order be rectified?
Yes, any mistakes apparent on the record can be rectified within 6 months from the date of issue of order. It has to be done by a proper officer in Form DRC-08.
5. Can payment of tax dues be made in instalments?
Yes, tax can be paid in instalments. You can find out more here.