In the ever-evolving landscape of taxation, receiving a Goods and Services Tax (GST) notice can be both perplexing and daunting. However, taxpayers can navigate the situation with confidence if they understand these notices. This guide gives an updated overview of GST notices. It covers common triggers, types, communication modes, response strategies, and the risks of inaction.
What is a GST Notice?
A GST notice is an official communication dispatched by tax authorities to taxpayers, highlight potential compliance issues or soliciting additional information. These notices serve as instruments to ensure adherence to GST laws and prompt corrective measures when discrepancies arise.
Common Reasons for Receiving GST Notices
Taxpayers might encounter GST notices for several reasons, including:
- Mismatches between GSTR-1 (outward supplies) and GSTR-3B (summary return) can raise red flags.
- Overstated or ineligible ITC claims may attract scrutiny.
- Delay in filing of GSTR-1 and GSTR-3B consecutively for more than six months
- Divergences between e-way bill data and GST returns can prompt inquiries.
- Operating without requisite GST registration when mandated by law.
- Non-payment of GST liability (tax) or the short-payment of the tax with or without the intent to defraud: show cause notice (SCN)
Types of GST Notices and Appropriate Responses
| Sr. no | Name of the Form- Notice | Description | Reply or Action to be taken | Time limit to respond | Consequence of non- response |
| 1. | GSTR-3A | Issued to non-filers of GST returns such as GSTR-1, GSTR-3B, GSTR-4, or GSTR-8. | File the pending returns promptly, accompanied by applicable late fees and interest. | Within 15 days from the date of notice issuance. | Tax authorities may proceed with a best judgment assessment. The penalty will be applicable of Rs. 10,000 or 10% of the tax due, whichever is higher. |
| 2. | CMP-05 | A show-cause notice questioning the taxpayer’s eligibility for the Composition Scheme. | Justify eligibility by providing necessary explanations or documents as to why the taxpayer should continue to be eligible for the composition scheme. | Within 15 days of receiving the notice. | The penalty stipulated under section 122 and order in CMP-07 denying the benefit of composition scheme |
| 3. | REG-03 | Issued during GST registration or amendment, seeking additional information or clarification. | Submit the required information or documents in Form REG-04. | Within 7 working days from the date of receiving notice. | Rejection of the GST registration or amendment application and inform the applicant electronically in REG-05. |
| 4. | REG-17 | A show-cause notice by the officer for potential cancellation of GST registration due to specified reasons. | Provide with the reasons for non-cancellation of GST registration in Form REG-18. | Within 7 working days from the date of receiving notice. | Cancellation of GST registration in REG-19 |
| 5. | REG-23 | Show cause notice why the cancellation of GST registration must be revoked, seeking clarification regarding the proposed cancellation of the taxpayer’s GST registration. | Respond by submitting a reply in Form REG-24, providing justifications for why the GST registration should not be canceled. | Within 7 working days from the date of receiving the notice | Cancellation of GST Registration will be revoked |
| 6. | PCT-03 | Issued to GST practitioners for alleged misconduct or breach of professional duties. | Provide a suitable explanation or defense against the allegations. | As specified in the notice. | Suspension or cancellation of the GST practitioner’s license. |
| 7. | RFD-08 | Issued when there is a discrepancy or issue with a refund application. | Address the concerns raised by providing additional information or rectifying errors in RFD-09 | Within 15 days of receipt of notice | Make an order in RFD-06 for rejecting the GST Refund application |
| 8. | ASMT-02 | Issued when additional information, clarification, or documents are required for provisional assessment. | Provide the requested information or documents in ASMT-03 | Within 15 days from the date of service of this notice | Application for provisional assessment may be rejected |
| 9. | ASMT-06 | Issued when additional information, clarification, or documents are required for final assessment. | Submit the necessary information or documents to assist in the final assessment in ASMT-07 | Within 15 days from the date of service of this notice | The final assessment may be completed without considering the taxpayer’s perspective, potentially resulting in unfavorable outcomes. |
| 10. | ASMT-10 | Issued when discrepancies are identified in the returns filed by the taxpayer | Reply in ASMT-11 giving reasons for discrepancies in the GST returns | Within 30 days from the date of notice issuance. | The tax authority may proceed with an assessment based on available information, potentially leading to additional tax liabilities and penalties. |
| 11. | ASMT-14 | Issued under Section 63 of the CGST Act when a taxpayer has not registered despite being liable for registration or when a registered person fails to file returns, leading the tax authority to propose a best judgment assessment. | Reply in written form and appear before the GST authority issuing the notice | Within 15 days of notice | Failure to respond within the stipulated time can lead the tax authority to proceed with the best judgment assessment, which could result in higher tax liabilities. |
| 12. | ADT-01 | Issued when tax authorities decide to audit the taxpayer’s records. | Cooperate with the audit process by providing the requested documents and information. | Within the time prescribed in the notice | Non-compliance may result in penalties and a more detailed investigation by the tax authorities |
| 14. | DRC-01 | Issued for tax demand due to discrepancies or audit findings. | Reply in DRC-03 for paying the amount of tax demanded in the notice along with Interest and penalty, if any applicable. Use DRC-06 to reply to the show cause notice | Within 7 days of receiving the notice. | Initiation of recovery proceedings. |
| 15. | DRC-10 | Issued for the auction of goods under Section 79(1)(b) of the CGST Act due to non-payment of dues. | Settle the outstanding dues immediately to prevent the auction of goods. | Before the auction date specified in the notice. Note that the last day of the bid or the last day of the auction cannot be before 15 days from the date of issue of the notice | Auctioning of the taxpayer’s goods to recover dues. |
| 16. | DRC-13 | Issued to a third party under Section 79(1)(c) of the CGST Act, directing them to pay any amount due to the defaulting taxpayer directly to the government. | The third party must comply by remitting the specified amount to the government. | Not applicable | The third party may face legal consequences for non-compliance. |
| 17. | DRC-16 | Notice for attachment and sale of immovable/ movable goods/ shares under section 79 | A taxpayer receiving this notice is prohibited from transferring or creating a charge on the said goods in any way and any transfer or charge created by you shall be invalid | Not applicable | Any contravention of the notice can invite prosecution and/or penalties |
Valid modes of sending GST Notices
Tax authorities employ various channels to dispatch GST notices, including:
- Hand-delivering the notice either directly or by a messenger by a courier to the taxpayer or his representative.
- By registered post or a speed post or a courier with an acknowledgement- addressed to the last known place of the business of the taxpayer.
- Communication to the email address
- Making it available on the GST portal after logging in.
- publication in a regional newspaper circulated in the locality- that of the taxpayer based on the last known residential address.
- If the tax authorities do not use any of the above means, they must affix it in a prominent place at the person’s last known business or residence. If they do not find this reasonable, they can affix a copy on the notice board of the concerned officer’s or authority’s office as a last resort.
Consequences of Ignoring GST Notices
Neglecting GST notices can lead to severe repercussions, such as:
- Monetary Penalties: Fines imposed for non-compliance or delayed responses.
- Interest Accruals: Accumulation of interest on unpaid tax liabilities.
- Legal Proceedings: Initiation of legal action, including prosecution in cases of serious violations.
- Business Disruptions: Suspension or cancellation of GST registration, hindering business operations.
- Reputational Damage: Tarnishing of the business’s reputation due to perceived non-compliance.
At Counselvise we have designed NoticeBoard to help you keep track of all your client’s notices. It helps you-
- Automate notice retrieval from Income Tax & GST portals
- Centralize all notices in one dashboard
- Track deadlines & receive timely reminders
- Use AI-powered suggestions for easy responses
Staying informed about GST regulations and maintaining diligent compliance practices are key to navigating the complexities of GST notices effectively.
Mehul