Show Cause Notice Under Section 73: Reply Steps and Time Limits
A section 73 GST show cause notice (summary in DRC-01) covers non-fraud demands for periods up to FY 2023-24. The time limits in sections 73(2) and 73(10), the penalty saved by paying within 30 days, voluntary payment in DRC-03, the hearing rights in section 75, and the appeal if the demand is confirmed.
In this article
A show cause notice under section 73 of the CGST Act proposes a demand of tax, interest and penalty where no fraud, wilful misstatement or suppression is alleged, for periods up to FY 2023-24. Its summary comes in Form DRC-01. The order must issue within three years of the annual return due date for the year, and the notice at least three months before that. If you pay the tax and interest within 30 days of the notice, no penalty is payable and the proceedings close (section 73(8)); otherwise, reply on the merits with your reconciliations, ask for a hearing, and keep the appeal in view if the demand is confirmed.
Sources checked: 29 October 2026
Facts checked on 24 October 2026 against sections 73, 75 and 107 of the CGST Act, rule 142 of the CGST Rules and the Central Tax notifications on the CBIC tax information portal; section 73 re-read on 29 October 2026.
This is general information, not legal advice. The notice, its period and its grounds decide your reply.
Key facts
| Point | What applies | Where it comes from |
|---|---|---|
| Periods covered | Up to FY 2023-24, non-fraud | Section 73(12), 73(1) |
| Notice summary | Form DRC-01 | Rule 142(1) |
| Order deadline | 3 years from the annual return due date for the year (or an erroneous refund) | Section 73(10) |
| Notice deadline | At least 3 months before the order deadline | Section 73(2) |
| Reply period | None fixed by law; as stated in the notice | Section 73; rule 142 |
| Pay within 30 days of the notice | Tax + interest: no penalty, proceedings concluded | Section 73(8) |
| Penalty on an order | 10% of the tax or ₹10,000, whichever is higher | Section 73(9) |
| Hearing | On request, or where an adverse decision is contemplated; adjournments at most three times | Section 75(4), (5) |
| Order not in time | Proceedings deemed concluded | Section 75(10) |
| Appeal | 3 months (+1 month on sufficient cause) to the Appellate Authority | Section 107(1), (4) |
Is my notice under section 73, 74 or 74A?
Check the financial year first. Section 73 covers non-fraud cases for periods up to FY 2023-24; section 74 covers fraud, wilful misstatement or suppression for the same years; section 74A covers both kinds of case for FY 2024-25 onwards. The section decides the time limits and the penalty, so a notice citing the wrong section for its year is worth showing to our expert team. For later years, see our guide to section 74A time limits.
Is the notice within time?
Section 73(10) gives the officer three years from the due date of the annual return for the year to pass the order; section 73(2) requires the notice at least three months before that. The Government extended the order deadline for FY 2017-18 to 2019-20 (Notifications 13/2022, 09/2023 and 56/2023-CT); those notifications do not mention the notice deadline, so the notice dates for those years are our arithmetic.
| Financial year | Annual return due | Latest notice | Latest order |
|---|---|---|---|
| 2017-18 | 5 Feb 2020 (Haryana, Punjab, Rajasthan, UP and others) | 30 Sep 2023 | 31 Dec 2023 (notified) |
| 2018-19 | 31 Dec 2020 | 30 Jan 2024 | 30 Apr 2024 (notified) |
| 2019-20 | 31 Mar 2021 | 31 May 2024 | 31 Aug 2024 (notified) |
| 2020-21 | 28 Feb 2022 | 28 Nov 2024 | 28 Feb 2025 |
| 2021-22 | 31 Dec 2022 | 30 Sep 2025 | 31 Dec 2025 |
| 2022-23 | 31 Dec 2023 | 30 Sep 2026 | 31 Dec 2026 |
| 2023-24 | 31 Dec 2024 | 30 Sep 2027 | 31 Dec 2027 |
These are derived by adding whole months to the same calendar day; the counting convention, and any stay excluded under section 75(1), are for our expert team to confirm on your notice. Our GST time limit checker works the dates out year by year once its rules are approved.
What are my options after a section 73 notice?
Pay within 30 days. Section 73(8): if you pay the tax and interest within 30 days of the issue of the notice, no penalty is payable and all proceedings on that notice are deemed concluded. Payment is reported in Form DRC-03 and acknowledged in DRC-04 (rule 142(2)); a payment within the section 73(8) window is concluded by an order in DRC-05 (rule 142(3)). The relief does not apply where self-assessed tax, or tax collected, was not paid within 30 days of its due date (section 73(11)).
Pay part, contest the rest. Pay what you accept and contest the remainder on the merits.
Contest in full. Reply with your grounds and evidence and ask for a personal hearing.
If you had paid before the notice on your own or the officer's working and told the officer in writing, section 73(5)-(6) says no notice is to be served for the tax so paid; if the officer thinks the payment fell short, a notice follows for the shortfall only (section 73(7)). That is the stage our guide to the DRC-01A intimation covers, and our DRC-01A response kit lists the documents to keep ready.
How do I reply to a section 73 notice?
- Diarise the reply date stated in the notice, and confirm the year and section.
- Test limitation against the table above.
- Rebuild the figure from GSTR-1, GSTR-3B, GSTR-2B and the books. A demand built on a comparison of returns can leave out credit notes, amendments, reverse-charge payments or adjustments across periods.
- Check the grounds. Under section 75(7) no demand can be confirmed on grounds other than those in the notice, and the amount cannot exceed the amount in the notice. A statement for further periods under section 73(3) counts as a notice only on the same grounds (section 73(4)).
- File the reply on the portal with reconciliations, invoices and contracts as annexures, and ask for a personal hearing in the reply itself.
- Attend the hearing with a written synopsis. Section 75(4) requires a hearing where you ask for one in writing or an adverse decision is contemplated; section 75(5) allows adjournments on sufficient cause, recorded in writing, at most three times.
The DRC-01 guide sets out what a reply contains as an outline, not a draft.
What penalty applies if the demand is confirmed?
Under section 73(9) the order determines the tax, interest and a penalty of 10% of the tax or ₹10,000, whichever is higher. For comparison, in a fraud case for the same years section 74 allows a 25% penalty if the tax and interest are paid within 30 days of the notice (section 74(8)) and 50% within 30 days of the order (section 74(11)). The order's summary is uploaded in Form DRC-07. If the order is not issued within the section 73(10) period, section 75(10) says the proceedings are deemed concluded.
How do I appeal a section 73 order?
An appeal lies to the Appellate Authority within three months of communication of the order (section 107(1)), with one more month on sufficient cause (section 107(4)). The pre-deposit is the admitted amount in full plus 10% of the tax in dispute, capped at ₹20 crore (section 107(6)); for IGST appeals the cap is ₹40 crore per appeal (IGST Act, section 20). For an order that demands only a penalty, the pre-deposit is 10% of the penalty from 1 October 2025. Paying the pre-deposit stays recovery of the balance (section 107(7)). Our GST appeal calculator works out the dates and the deposit once its rules are approved, and the next forum is covered in our GSTAT appeal guide.
What may change?
The GST Council recommended on 8 October 2026 a 5% penalty in non-fraud cases where tax and interest are paid within 30 days of a section 73 order, and removal of the minimum ₹10,000 penalty in non-fraud cases. These are recommendations only until the Act is amended and notified.
Getting help
Our GST audit and litigation support team checks limitation, reconciles the demand and prepares the reply and hearing synopsis; we cannot promise how the officer will decide. The tax notices and litigation hub shows every stage on one page. To ask our expert team about your notice, book a consultation.
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Related notice guides
What each notice means, the time limit, what a reply contains and the official sources.
Frequently asked questions
What is a show cause notice under section 73 of the CGST Act?
It is a notice asking why you should not pay tax not paid, short paid or erroneously refunded, or input tax credit wrongly availed or utilised, with interest and penalty, where no fraud, wilful misstatement or suppression is alleged. Section 73 applies only to periods up to FY 2023-24 (section 73(12)); its summary is uploaded in Form DRC-01.
How many days do I get to reply to a section 73 notice?
Neither section 73 nor rule 142 fixes a reply period, so the period is the one stated in the notice. If you need more time or a hearing, ask in writing before that date; section 75(5) allows adjournments on sufficient cause, at most three times.
Can I avoid the penalty under section 73?
Yes, if you pay the tax and interest within 30 days of the issue of the notice: section 73(8) says no penalty is then payable and the proceedings are deemed concluded. This relief does not apply where self-assessed tax or tax collected was not paid within 30 days of its due date (section 73(11)).
What penalty applies if the demand is confirmed under section 73?
Ten per cent of the tax or ₹10,000, whichever is higher, along with the tax and interest (section 73(9)).
What is the time limit for a section 73 order?
Three years from the due date of the annual return for the financial year concerned (section 73(10)), and the notice must issue at least three months before that (section 73(2)). For FY 2023-24 that gives 30 September 2027 for the notice and 31 December 2027 for the order, on our arithmetic.
How do I appeal a section 73 order?
File an appeal to the Appellate Authority within three months of communication of the order (section 107(1)), extendable by one month on sufficient cause (section 107(4)), with a pre-deposit of the admitted amount in full plus 10% of the tax in dispute, capped at ₹20 crore (section 107(6)).
Sources
- CGST Act 2017, section 73 — non-fraud demands for periods up to FY 2023-24
- CGST Act 2017, section 75 — hearings, adjournments, the order and deemed conclusion
- CGST Rules 2017, rule 142 — DRC-01 summary, DRC-03 payment, DRC-05 conclusion
- CGST Act 2017, section 107 — appeal to the Appellate Authority and pre-deposit
- Notification 56/2023-Central Tax, 28 December 2023 — extended section 73(10) order dates for FY 2018-19 and 2019-20
This article is general information for Indian MSMEs, not advice on your specific case. Scheme terms, tax rates and due dates change; the sources above were checked when the article was written or last updated. Speak to a professional before acting on it.
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