Show Cause Notice in GST (DRC-01) — Meaning, Time Limits & Reply Format

What is DRC-01 (SCN) in GST

Where tax has not been paid, short-paid, erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer issues a summary of the SCN in Form GST DRC-01 along with the notice under Section 73 (non-fraud) or Section 74 (fraud / wilful mis-statement / suppression). Section 74A applies to periods from FY 2024-25 onwards.

Statutory limitation on the SCN itself

The SCN must be issued at least 3 months (Section 73) or 6 months (Section 74) before the last date for passing the adjudication order. FY-wise due dates are extended by CBIC notifications from time to time. A challenge to limitation is a threshold ground and should be taken at the earliest opportunity.

Common grounds in a DRC-06 reply

Grounds are usually a mix of jurisdictional, procedural and merits-based objections.

• SCN barred by limitation — Section 73(2) / 74(2) / 74A(2)
• Improper invocation of Section 74 without material showing fraud / suppression
• Denial of natural justice — hearing, cross-examination, RUDs
• Merits — reconciliation, ITC eligibility u/s 16(2), Section 17(5) block credits
• Case law on the specific issue — Supreme Court, High Court, AAAR / AAR

A defensible reply combines procedural safeguards with grounds on merits. Use this checklist as the skeleton of every DRC-01 reply.

1. 1. Proper officer & jurisdiction
   Verify that the officer issuing the DRC-01 has monetary and territorial jurisdiction under the CBIC circulars. A notice issued without jurisdiction is void.
2. 2. Statutory time limits
   Check whether the DRC-01 is within limitation under Section 73/74/74A (or the applicable rule). A time-barred notice is liable to be dropped as a threshold ground.
3. 3. Natural justice
   Confirm that the SCN is not vague, that relied-upon documents are enclosed, and that opportunity of personal hearing under Section 75(4) has been granted.
4. 4. Statement of facts
   A clean, chronological narrative — parties, GSTIN, period, returns, audit / scrutiny trigger, prior correspondence and payments made.
5. 5. Grounds on law and merits
   Discrepancy-wise reply — agreed, partly agreed, or disagreed, with the section, rule, circular and case law relied on. Reconciliations attached as annexures.
6. 6. Correct form & payments
   File the reply in the prescribed form on the GST portal. Any admitted tax is paid through DRC-03 with interest, penalty and late fee shown separately.
7. 7. Prayer & hearing request
   End the reply with a specific prayer (drop proceedings / grant hearing / accept payment) and expressly request a personal hearing.

Frequently asked questions

Related notices & orders