How to Reply to a GST DRC-01 Notice: Step-by-Step Guide

What Is a GST DRC-01 Notice?

Under Rule 142 of the Central Goods and Services Tax Rules, 2017, the proper officer serving a notice under Section 73, 74 or 74A (among other provisions) must also serve, along with it, a summary of the notice electronically in Form GST DRC-01.

The form is therefore a summary, not the notice itself. The substantive show cause notice — setting out the allegations, the material relied upon, the provisions invoked and the amount proposed — should accompany it as an attachment.

This distinction matters. Where a DRC-01 summary is uploaded without any proper show cause notice attached, the taxpayer has not been told the case against him. Courts have set aside demands where the summary stood alone, on the footing that a summary cannot substitute for the notice the Act requires.

So the first thing to check is whether an actual show cause notice exists behind the summary. If it does not, that is a ground, and it should be taken in the reply and preserved.

The Related Forms

DRC-01A deserves attention. It comes before the notice and invites the taxpayer to pay or to explain. A considered response at that stage — with reconciliations attached — sometimes prevents a notice altogether, and it costs far less than contesting a demand later. It should not be ignored on the view that it is “only an intimation”.

What to Check in a DRC-01 Notice

Is there a show cause notice behind the summary? As above.

Is the correct provision invoked? For periods up to FY 2023-24, Section 73 applies where fraud, wilful misstatement or suppression is not alleged, and Section 74 where it is. For FY 2024-25 onwards, Section 74A applies to both, having been inserted by the Finance (No. 2) Act, 2024 and brought into force from 1 November 2024. A notice for FY 2024-25 issued under Section 73 or 74 has invoked a provision that no longer governs that period.

Is it within time? Section 73 requires the notice at least three months before the last date for the order, which is three years from the due date for the annual return. Section 74 requires six months, against a five-year outer limit. Section 74A requires the notice within forty-two months of the due date for the annual return, and the order within twelve months of the notice, extendable by six.

Does it disclose the grounds and the material? Where Section 74 has been invoked, the allegation of fraud, wilful misstatement or suppression must be specifically stated and supported — not merely recited.

How to Reply to a GST DRC-01 Notice in DRC-06

When replying to a GST DRC-01 notice, keep your DRC-06 reply precise, evidence-based and focused on each allegation. Follow these steps:

Answer issue by issue. DRC-01 notices commonly bundle several allegations — a mismatch between GSTR-3B and GSTR-2A or 2B, credit disallowed for a supplier’s default, a classification or rate dispute, a place-of-supply question, an interest computation. Each needs its own heading and its own answer.

Lead with reconciliation. Most GST demands are arithmetical in origin. A table reconciling the department’s figure with the taxpayer’s, supported by invoices, ledgers, e-way bills, contracts and bank statements, is worth more than pages of argument.

Address credit denials at their root. Where credit has been disallowed because a supplier did not pay or did not file, produce the invoice, proof of receipt of goods or services, proof of payment through banking channels, and the transport documentation. The conditions in Section 16 are what must be shown to be satisfied.

Take the legal points expressly — limitation, jurisdiction, the absence of a proper notice, and the absence of particulars supporting a fraud allegation. Section 75(2) provides that where a Section 74 notice is found unsustainable because fraud, wilful misstatement or suppression is not established, the tax is to be determined as if the notice had been issued under Section 73, with the lower penalty that follows.

Request a personal hearing in the reply itself. Section 75(4) requires an opportunity of hearing where a request is received in writing or where an adverse decision is contemplated. Section 75(5) permits adjournments on sufficient cause, subject to the limit the section sets.

File within the time stated. Where more time is genuinely required, apply in writing before the period expires.

GST Demand: Should You Pay or Contest It?

The Act rewards early settlement, and the arithmetic is often compelling.

Under Section 73, payment of tax with interest before the notice means no notice is issued for that amount; payment within thirty days of the notice means no penalty and the proceedings are deemed concluded. Under Section 74 the corresponding stages carry penalty at reduced rates. Section 74A provides a longer cure period than the earlier provisions.

Payment is made in DRC-03, and it should be correctly linked to the proceeding, since an unlinked payment can lead to the demand being pursued regardless.

Where a demand relates to an early financial year and falls within its scope, Section 128A provides a conditional waiver of interest and penalty on payment of tax, subject to the conditions and deadlines it prescribes.

Two Protections Worth Knowing

Section 75(7) provides that the amount demanded in the order shall not exceed the amount specified in the notice, and that no demand shall be confirmed on grounds other than those specified in the notice. An order that introduces a new ground is vulnerable.

Natural justice. An order passed without considering the reply, or without the hearing Section 75(4) requires, is regularly set aside — and it is one of the more reliable grounds in GST litigation, given the volume of adjudication.

Practical Tips

Monitor the portal. DRC-01 notices appear under the additional notices and orders view. Not seeing the notice is not a defence, and the most common cause of an ex parte demand is an unmonitored portal and a dead registered email address.

Keep the reply on the record. File in DRC-06 on the portal rather than by email alone, and retain the acknowledgement.

Preserve everything for the appeal. A first appeal under Section 107 is decided largely on the record created at this stage. Documents not produced with the reply are harder to introduce later, and the appeal carries its own three-month limit and pre-deposit.

FAQs

1. What is DRC-01 in GST?

DRC-01 is the electronic summary of a GST show cause notice issued under Rule 142. It is not a substitute for the actual notice.

2. What should I do after receiving a DRC-01?

Check the underlying show cause notice, verify the legal provision and limitation period, review the allegations, and prepare a point-by-point reply in DRC-06.

3. What is DRC-06?

DRC-06 is the form used by a taxpayer to submit a reply to a GST show cause notice.

4. Can a DRC-01 be challenged if there is no proper notice?

Yes. If only a DRC-01 summary is uploaded without the substantive show cause notice, the taxpayer can raise this procedural defect in the reply and preserve it as a ground of challenge.

5. Can I request a personal hearing?

Yes. A taxpayer can request a personal hearing in writing. Section 75(4) provides for an opportunity of hearing in specified circumstances.

6. What happens if I do not reply to DRC-01?

Failure to respond can result in an adverse order and enforceable GST demand. The reply should be filed within the prescribed time and the acknowledgement retained.

Legal Information Disclaimer

This article is published for general legal information and educational purposes only. It reflects the position of Indian law as researched up to 10 August 2026 and may not account for subsequent amendments, notifications, circulars or judicial developments. GST timelines have been extended by notification for particular financial years, so the position for a specific year should be checked. It is not legal advice, does not take into account any individual’s particular facts or circumstances, and no advocate-client relationship arises from reading it. Readers dealing with an actual matter should obtain independent professional advice from a qualified advocate or tax professional of their own choosing before acting on any information contained here. Statutory provisions, notified figures, rules and case citations referred to in this article have been compiled from published legal materials and may contain errors or omissions, and may have changed since the date stated; no representation or warranty, express or implied, is given as to their accuracy, completeness or currency, and each should be independently verified against the official text or the official record before being relied upon. No liability is accepted for any loss arising from reliance on this article.

Sources / Authorities

• Central Goods and Services Tax Act, 2017 — Sections 16, 73, 74, 74A, 75 (including sub-sections (2), (4), (5) and (7)), 107 and 128A — India Code, https://www.indiacode.nic.in
• Central Goods and Services Tax Rules, 2017 — Rule 142, including sub-rule (1A), and Forms GST DRC-01A, DRC-01, DRC-03, DRC-06 and DRC-07
• Finance (No. 2) Act, 2024 — insertion of Section 74A applicable from FY 2024-25
• Notification No. 17/2024-Central Tax — appointing 1 November 2024 as the date of commencement of the relevant provisions