GST · Notice
DRC-01: Show cause notice — demand of tax
A show cause notice proposing a demand of tax, interest and penalty. What to do: diarise the reply date and confirm the period involved, then test whether the demand is time-barred. Time to reply: 30 days from the date of the notice; a customary default, so the period on your notice governs.
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Key facts
A show cause notice proposing a demand of tax, interest and penalty. Sections 73 (non-fraud) and 74 (fraud, suppression or wilful misstatement) apply up to FY 2023-24; Section 74A applies from FY 2024-25 onwards.
| Form | DRC-01 (Show cause notice — demand of tax) |
|---|---|
| Issued by | The GST officer named on the document |
| Issued under | Section 73 / 74 / 74A r/w Rule 142(1), CGST Act & Rules 2017 |
| What it asks of you | A reply in DRC-06, within the time allowed |
| Your time to act | 30 days from the date of the notice; a customary default, so the period on your notice governs. |
| Reply or appeal in | DRC-06 |
| If it is ignored | Without a reply the officer decides on the material on record and issues an order in DRC-07. |
Time allowed
Reply: 30 days from the date of the notice. This is a customary default, not a period fixed by statute. The show cause notice states the period for reply — use it.
The date stated on your notice always wins.
More time: Adjournment may be sought under Section 75(5) — up to three times, on sufficient cause recorded in writing.
What to do now
Diarise the reply date and confirm the period involved
Check the financial year on the notice: FY 2024-25 onwards falls under Section 74A, earlier years under Section 73 or 74. The section decides the penalty windows and the limitation.
Test whether the demand is time-barred
Section 73: order within 3 years of the due date of the annual return. Section 74: within 5 years. Section 74A: notice within 42 months of that due date, order within 12 months of the notice (extendable by 6 months). A notice outside these limits is open to challenge at the threshold.
Reconcile the alleged shortfall against the books
Rebuild the number from GSTR-1, GSTR-3B, GSTR-2B and the ledgers. Most demands arise from a mechanical comparison that ignores credit notes, amendments, RCM discharge or cross-period adjustments.
Decide: contest, or pay and close
Quantify the penalty saving from paying early; the windows depend on the period (see the follow-on dates). Up to FY 2023-24 — non-fraud: no penalty if tax and interest are paid within 30 days of the notice (Section 73(8)); fraud: 25% penalty if paid within 30 days of the notice (Section 74(8)), 50% within 30 days of the order (Section 74(11)). FY 2024-25 onwards (Section 74A): the same reductions, with 60-day windows.
File the reply in DRC-06 with evidence
Attach the reconciliations, sample invoices, contracts and case law. Ask for a personal hearing in the reply itself — Section 75(4) requires one where an adverse decision is contemplated or a hearing is requested.
Attend the personal hearing
Take a written synopsis and the full paper book. Record any additional submissions made at the hearing.
What a reply contains
A reply usually covers the points below. This is an outline, not a draft: our expert team writes it on your own records.
- Reference: the DRC-01 notice's reference number and date, your GSTIN and the period it covers.
- An answer to each point the notice raises, in the same order, saying what you accept and what you dispute.
- Evidence for each point (from the steps for this notice): reconcile the alleged shortfall against the books.
- Where it is filed: DRC-06.
- A request for a personal hearing, if you want to be heard before a decision.
If it is ignored
- Without a reply the officer decides on the material on record and issues an order in DRC-07.
- Penalty rises sharply once the order is passed: up to 100% of tax in fraud cases.
- The demand becomes recoverable under Section 79 three months after service of the order.
Other dates that follow from it
- If the period is up to FY 2023-24: Pay tax + interest with no penalty — non-fraud (Section 73(8))Up to FY 2023-24: no penalty, and the proceedings close, if tax and interest are paid within 30 days of issue of the notice.
- If the period is up to FY 2023-24: Pay with 25% penalty — fraud cases (Section 74(8))Up to FY 2023-24: tax, interest and a penalty of 25% of the tax, paid within 30 days of the notice, conclude the proceedings.
- If the period is FY 2024-25 onwards: Pay tax + interest with no penalty — non-fraud (Section 74A)FY 2024-25 onwards: no penalty if tax and interest are paid within 60 days of issue of the notice (Section 74A(8)(ii)).
- If the period is FY 2024-25 onwards: Pay with 25% penalty — fraud cases (Section 74A)FY 2024-25 onwards: tax, interest and a penalty of 25% of the tax, paid within 60 days of the notice, conclude the proceedings (Section 74A(9)(ii)).
Official sources
Sources checked on 24 October 2026.
- CGST Act 2017, section 73 (demand, non-fraud, up to FY 2023-24) · read 24 October 2026
- CGST Act 2017, section 74 (demand, fraud, up to FY 2023-24) · read 24 October 2026
- CGST Act 2017, section 74A (demand, FY 2024-25 onwards) · read 24 October 2026
- CGST Rules 2017, rule 142 (notice and order for demand: DRC-01A, DRC-03, DRC-04, DRC-05) · read 24 October 2026
- CGST Act 2017, section 75 (hearing and adjournments) · read 24 October 2026
Any provision named on this page but not listed here is to be confirmed by our expert team.
Frequently asked questions
What is a GST DRC-01 notice?
A show cause notice proposing a demand of tax, interest and penalty. Sections 73 (non-fraud) and 74 (fraud, suppression or wilful misstatement) apply up to FY 2023-24; Section 74A applies from FY 2024-25 onwards.
How much time do I have to act on a GST DRC-01 notice?
Reply: 30 days from the date of the notice. This is a customary default, not a period fixed by statute. The show cause notice states the period for reply — use it. The date stated on your notice always wins. Adjournment may be sought under Section 75(5) — up to three times, on sufficient cause recorded in writing.
What happens if I ignore a GST DRC-01 notice?
Without a reply the officer decides on the material on record and issues an order in DRC-07. Penalty rises sharply once the order is passed: up to 100% of tax in fraud cases. The demand becomes recoverable under Section 79 three months after service of the order.
Related guides
- DRC-07: Summary of order — demand confirmed
- DRC-01A: Pre-notice intimation of liability
- GST Notices Explained: Every Common Form, What It Means and How Long You Have to Reply
- Section 74A GST: Time Limit for Notice and Order (FY 2024-25 Onwards)
- Show Cause Notice Under Section 73: Reply Steps and Time Limits
- DRC-01A Pre-Show-Cause Intimation: Is It Mandatory, How Long You Have and How to Reply
- ASMT-10 Notice: What It Means and How to Reply
- Where this sits: Reply and personal hearing
General information from the provisions this notice is issued under, not legal advice. The dates and periods stated on your notice always win. Our expert team can read the full notice with you.