DRC-01 Reply — Answering the GST Show Cause Notice (Sections 73, 74, 74A)
Quick answer: DRC-01 is the summary of a GST show-cause notice under Section 73, 74 or 74A. You reply in DRC-06 within the time stated — normally 30 days — after reconciling invoice by invoice; paying the genuine shortfall in DRC-03 within that window removes (s.73) or reduces (s.74/74A) the penalty, and the contested part is argued with evidence at a personal hearing. We split, draft, appear and appeal.
Last verified 4 October 2026 — rules on this page checked against the current notifications. We update it the day a rule changes.
Section 73, 74 and 74A — what the notice is really alleging
| Section | Allegation | Notice limit | Penalty if contested and lost | Pay-to-close benefit |
|---|---|---|---|---|
| 73 (up to FY 2023-24) | Short payment / excess ITC without fraud | 3 months before 3 years from annual-return due date | 10% of tax or ₹10,000 | No penalty if tax + interest paid within 30 days of notice |
| 74 (up to FY 2023-24) | Fraud, wilful misstatement, suppression | 6 months before 5 years | 100% of tax | 25% penalty within 30 days of notice; 50% within 30 days of order |
| 74A (FY 2024-25 onwards) | Both, under one section | 42 months from annual-return due date; order within 12 months | 10% / 100% by category | Graded relief at pre-notice, 60-days-of-notice and 60-days-of-order stages |
How a DRC-01 reply is built
- Read the attached notice, not just the summary — the allegations, the period, the section, the computation sheet, the DIN.
- Reconcile before you argue — GSTR-1 vs 3B vs 2B vs books, invoice by invoice for ITC issues; rate and classification for tax issues; time of supply for GST 2.0 transition periods.
- Split the demand: what is a timing difference, what is a genuine shortfall (pay in DRC-03 and claim the penalty relief), what is wrongly alleged (contest with evidence and law).
- Draft issue-wise in DRC-06 with annexures — reconciliation statements, supplier filing proofs, e-way bills, agreements, circulars and case law.
- Request the personal hearing and appear; file written submissions after it.
- Calendar the order: Section 73 orders are due within 3 years, Section 74 within 5, 74A within 12 months of the notice — a late order is itself a ground.
What we do
- Same-week assessment of the notice: section, period, limitation, jurisdiction and the real exposure
- Invoice-level reconciliation and the split between pay, contest and timing
- DRC-06 reply with annexures; DRC-03 strategy for penalty relief where paying is right
- Personal hearing representation at the Central or State office that issued the notice
- APL-01 appeal with 10% pre-deposit where the order goes wrong, then GSTAT
Client: An Okhla exporter of garments, approximately 80 employees.
Situation: DRC-01 under Section 73 alleging excess ITC of ₹31 lakh across two years, built on 2A/2B mismatches.
Approach: Reconciled every flagged invoice to supplier filings; identified ₹2.1 lakh of genuine supplier non-filing and paid it in DRC-03 within the 30-day window (no penalty); contested the balance as timing and matched-later credits with supplier GSTR-1 evidence; appeared at the hearing.
Outcome: Demand confined to the ₹2.1 lakh already paid; no penalty; no appeal needed.
Client identity and certain details have been changed or withheld to protect confidentiality. Outcomes depend on individual facts and are not a guarantee of results.
Related: all GST notice types and deadlines · DRC-01C (ITC mismatch, 7 days) · ASMT-10 scrutiny · first 48 hours after a notice.
Talk to us before you file anything
Frequently asked questions
What is a DRC-01 in GST?
DRC-01 is the summary of a show-cause notice issued under Section 73 (non-fraud), Section 74 (fraud/suppression) or, for FY 2024-25 onwards, the unified Section 74A. The detailed notice is attached; DRC-01 is what appears on the portal under View Notices and Orders. It is a demand proceeding, not a mere query.
DRC-01 vs DRC-01A vs DRC-01C — which did I get?
DRC-01A is the pre-notice intimation (pay now to close the matter cheaply); DRC-01 is the show-cause summary itself; DRC-01C is the Rule 88D intimation for an ITC mismatch between GSTR-3B and GSTR-2B, with its own 7-day Part B response. Each has a different deadline and a different reply form.
What is the time limit to reply to a DRC-01?
The notice states it — normally 30 days — and the reply is filed in DRC-06 on the portal. A written request for adjournment is possible but limited (three adjournments at most), and silence leads to an ex parte order in DRC-07.
Can I reduce the penalty by paying after a DRC-01?
Yes. Under Section 73, tax and interest paid within 30 days of the notice means no penalty. Under Section 74, 25% penalty if paid within 30 days of the notice, 50% within 30 days of the order. Section 74A (FY 2024-25 onwards) has its own graded scale. Payment is made in DRC-03 and intimated — but paying is an admission, so the reconciliation comes first.
Do I get a personal hearing?
Yes, where you request it or where an adverse order is proposed — the law requires an opportunity of hearing. We request it in the DRC-06 reply and appear, in person or by video as the office lists it.
What happens after the order?
DRC-07 is the order summary; the demand becomes recoverable. Appeal lies to the Appellate Authority in APL-01 within three months with a pre-deposit of 10% of the disputed tax, then to GSTAT. The reply stage is where the record is built — appeals rarely add new facts.
Which office hears my DRC-01 in Delhi-NCR or Bihar?
The officer who issued it — Central (CGST Delhi, Gurugram, Faridabad, Ghaziabad, Noida, Patna) or State (Delhi Trade & Taxes, UP State Tax, Haryana Excise & Taxation, Bihar Commercial Taxes). Jurisdiction is on the notice; replying to the wrong one is a common error.