⚖️ 10 GST Notices You Might Receive and How to Respond Professionally

Goods and Services Tax (GST) compliance is integral to running a business in India. However, due to frequent changes in law, return mismatches, or technical errors, taxpayers may receive various types of GST notices from the department. Understanding the nature of these notices and how to respond correctly is crucial to avoid penalties and ensure compliance.

 

Below are the Top 10 Common GST Notices, their meanings, causes, and professional response strategies.

1. 📩 Notice for Non-Filing of GSTR-3B (U/S 46 of CGST Act)

Reason Issued:
Failure to file monthly/quarterly summary return GSTR-3B within the due date.

Implication:
Penalty under Section 47, interest on tax liability, and possible suspension of GSTIN.

How to Respond:

• File the pending GSTR-3B return immediately.

• Pay applicable late fees and interest via DRC-03 if not auto-calculated.

• Ensure timely filing going forward to avoid system-generated notices.

2. 🔍 Mismatch Between GSTR-1 and GSTR-3B

Reason Issued:
Mismatch in outward supply details between GSTR-1 (invoice-wise) and GSTR-3B (summary return).

Implication:
Possible tax evasion concerns or under-reporting of liability.

How to Respond:

• Perform detailed reconciliation between GSTR-1 and GSTR-3B.

• If genuine error, correct through amendment in subsequent GSTR-1.

• If already paid correctly in GSTR-3B, explain with working papers.

3. 🧾 Mismatch Between ITC Claimed and GSTR-2A/2B

Reason Issued:
Discrepancy in Input Tax Credit (ITC) claimed in GSTR-3B vis-à-vis auto-populated GSTR-2A/2B.

Implication:
Possible disallowance of ITC and demand notice under Section 73/74.

How to Respond:

• Reconcile ITC claimed with GSTR-2B (as it's now the legally recognized document).

• Provide vendor invoices, payment proofs, and contract terms if ITC is claimed correctly.

• Coordinate with vendors for correction in their GSTR-1 if mismatch is on their part.

4. 📉 Notice for Excess Refund Claimed

Reason Issued:
Department suspects that a refund claim (on exports, inverted duty, etc.) is inflated or inadmissible.

Implication:
Refund rejection, demand for recovery with interest and penalty.

How to Respond:

• Submit detailed refund working, invoice copies, shipping bills, LUTs, and ledger extracts.

• Ensure refund is within permissible limits as per Rule 89.

• Rectify any computation errors voluntarily if identified.

5. ⚠️ Show Cause Notice (SCN) for Ineligible/Fake ITC Claim (U/S 74)

Reason Issued:
Claim of Input Tax Credit without actual receipt of goods/services or involvement in fake invoicing.

Implication:
Demand of tax with penalty up to 100% and possible prosecution.

How to Respond:

• Engage a GST lawyer or professional for drafting reply.

• Submit purchase invoices, goods receipt proofs, transport documents, and vendor GST compliance reports.

• If error was inadvertent, consider opting for voluntary payment under Section 73 (with reduced penalty).

6. 📋 Notice for Scrutiny of Returns (U/S 61)

Reason Issued:
Return selected for scrutiny based on risk parameters or discrepancies noticed.

Implication:
Failure to respond may lead to assessment proceedings under Section 73 or 74.

How to Respond:

• Carefully analyze the scrutiny points raised.

• Submit point-wise reply with supporting documents and reconciliations.

• Use the online "Reply to Notice" function on the GST portal under the "Notices and Orders" tab.

7. ⏱️ Notice for Non-Generation or Expiry of E-Way Bill

Reason Issued:
Transport of goods without valid e-way bill, or goods not delivered within e-way bill validity.

Implication:
Penalties under Section 129, including detention of goods and vehicle.

How to Respond:

• Submit transport documents and delivery challans.

• Provide reasons for delay (natural calamity, vehicle breakdown, etc.) and request waiver.

• Ensure future compliance through internal transport tracking systems.

8. 🧮 Notice U/S 73 for Tax Short Paid or Not Paid (Non-Fraud Cases)

Reason Issued:
Department believes that tax has been underpaid due to unintentional error or omission.

Implication:
Demand for tax with 18% interest and 10% penalty.

How to Respond:

• Review notice in detail and check accuracy of department's computation.

• If error is genuine, consider payment via DRC-03 with written intimation.

• If dispute exists, submit legal reply with evidence, books, and case laws if applicable.

9. 📦 Notice for Non-Reversal of ITC – Payment Not Made Within 180 Days (Rule 37)

Reason Issued:
Claimed ITC but failed to pay supplier within 180 days from invoice date.

Implication:
Reversal of ITC claimed, along with interest.

How to Respond:

• Review vendor payments and reconcile with ageing reports.

• If payment delayed, reverse ITC voluntarily and reclaim once paid.

• Keep communication and payment terms documented in vendor agreements.

10. 🛑 Notice for Cancellation of GST Registration

Reason Issued:
Non-filing of returns, non-operation of business, or use of fake documents during registration.

Implication:
GSTIN may be cancelled suo-motu and ITC reversed.

How to Respond:

• File all pending returns and reply with reasons for non-compliance.

• If genuine business exists, submit proof of activity (e.g., invoices, utility bills, bank statements).

• File application for revocation (REG-21) within 30 days of cancellation.

✅ Professional Tips for Responding to GST Notices

• 📅 Always meet deadlines: Most notices have fixed response timelines (usually 7–30 days).

• 🗂️ Maintain complete documentation: Contracts, ledgers, invoices, and emails may be required as evidence.

• 🛠️ Use the GST Portal effectively: Track notices under "Services > User Services > View Notices and Orders".

• 📞 Consult a GST professional or CA: Especially in SCNs, ITC disputes, or refund rejections.

🧠 Final Thought

GST notices are a part of the evolving compliance environment, but with proper awareness and a disciplined accounting system, they can be effectively managed. At Tax Manthan, we aim to simplify complex tax matters so you can stay focused on growing your business — not battling paperwork.