GST Notices

Notice frameworks and timelines can change. This article is for general information and does not constitute tax advice.

The Big Change: Section 74A Replaces 73 and 74

Until Finance Act 2024, demands ran through Section 73 (non-fraud, 3-year/33-month limitation, penalty 10% of tax or ₹10,000, whichever higher) or Section 74 (fraud/wilful suppression, 5-year/54-month limitation, penalty equal to tax). From FY 2024-25 onwards, both are replaced by a unified Section 74A: one 42-month timeline regardless of fraud allegations, though the fraud distinction still determines penalty (capped at 100% for fraud). Demands for FY 2017-18 through FY 2023-24 continue under the older framework; only FY 2024-25 onward falls under 74A. Section 74A also carries a longer 60-day payment window for reduced penalty, and a ₹1,000 minimum threshold below which no notice can issue.

The Common Notice Sequence

A scrutiny notice (ASMT-10) or pre-show cause intimation (DRC-01A) typically comes first, followed by a formal show cause notice (DRC-01) if unresolved, and a final demand order (DRC-07) if the reply doesn’t resolve matters. Registration notices get 7 working days; ASMT-10 and DRC-01 both get 30 days, with a personal hearing worth requesting explicitly since it isn’t automatic.

Reducing Exposure Before It Escalates

Paying voluntarily through DRC-03 in response to a DRC-01A intimation, before a formal show cause notice, generally secures a meaningfully reduced penalty. Where a demand is only partly disputed, the undisputed portion can be paid immediately while the rest is contested, stopping interest on that part.