The 100-day GST notice playbook: responding without escalating

A GST notice does not need to escalate into a four-year litigation. Most do, because the response in the first thirty days sets the trajectory. We have walked clients through more than sixty notice cycles in the last three years. The pattern is consistent: the work that prevents escalation is procedural and front-loaded, not legal and back-loaded.

Here is the framework we run.

What kind of notice you actually have

Before responding, identify which notice you are facing. The CGST Act provides for several.

DRC-01A. An intimation, not a demand. The officer is telling you they believe there is a discrepancy and inviting you to pay or explain before they issue a formal SCN. Response window: typically 15 days. If you can settle on the merits at this stage, you avoid Section 73/74 interest exposure and most of the penalty.

DRC-01. The Show Cause Notice. Issued under Section 73 (non-fraud, three-year period) or Section 74 (fraud/suppression, five-year period). Response window: 30 days from receipt typically. This is where most matters land.

DRC-02. A statement to an SCN — typically issued where the SCN cannot be served physically or where additional information is being added.

GSTR-3B mismatch notices. Auto-generated comparisons between GSTR-1, GSTR-3B and GSTR-2B. Sometimes informal letters; sometimes the entry point to a formal SCN.

Rule 36(4) ITC notices. Where ITC claimed exceeds the ITC reflected in GSTR-2B by more than the 5% buffer (now effectively zero post the amendments).

Section 73 and Section 74 are the two operative powers under which most notices proceed. The difference is enormous: Section 73 penalty is 10% of tax or ₹10,000 whichever is higher (and zero if paid within 30 days of SCN with interest). Section 74 penalty is 100% of tax. Whether the officer has framed the notice under 73 or 74 is the first thing to look at.

Day 1 to Day 5: data gathering

The first instinct is to write a reply. Resist it. The first five days are entirely data gathering.

Pull the relevant tax periods. If the notice is on ITC mismatch for FY 2023-24, pull every GSTR-1, GSTR-3B, GSTR-2B, ITC register and purchase register for that year. Pull the GSTR-9 annual return and the GSTR-9C reconciliation if filed.

Build a working file. One spreadsheet with each line of the notice mapped to the underlying transactions in the books. If the officer says ITC of ₹4.2 crore is disallowed, list every invoice that adds up to that ₹4.2 crore. Identify which of those invoices: (a) you can defend on merits, (b) you cannot defend, (c) require supplier-side action.

Most reply files we have inherited from in-house teams are missing this transaction-level mapping. The reply argues legal positions; the officer asks for invoices; the reply does not have them ready. The matter escalates.

Day 6 to Day 20: draft, internal review, refile

Draft the reply in a structure the adjudicator can read. Our template:

Para 1. Notice received, parties, period, allegations summarised in one sentence.

Para 2-5. Each allegation, set out individually with the officer's contention and the registrant's defence.

Para 6. Supporting documents annexed.

Para 7. Prayer.

The body of the reply is the merits defence. Cite the section, cite the rule, cite the relevant circular, cite any decided case. Avoid emotive language. The officer needs to be able to copy your defence into their order and not feel uncomfortable doing so.

Internal review by two people: a tax person and a non-tax person. The non-tax person tests whether the reply is comprehensible to someone who has not lived the transaction. If they cannot follow it, the adjudicator will not either.

Day 21 to Day 25: partial concession analysis

The hardest part. Are there allegations where you should concede rather than fight?

If a ₹50 lakh ITC entry is on an invoice from a supplier who has not filed GSTR-1, the merits position is weak post the Section 16 amendments. Conceding ₹50 lakh, paying tax with interest, avoids penalty entirely under Section 73(5) read with 73(8) if paid before the order. Fighting it adds penalty exposure and litigation cost with low probability of success.

Run a triage. For each allegation: (1) probability of success at adjudication 0–100%, (2) financial exposure if lost, (3) cost of litigating. Concede where probability is below 30% and exposure is manageable. Fight where probability is above 60% or strategic interests require it.

Day 26 to Day 30: file the reply

Filed online through the GST portal under the relevant reference number. Hard-copy submission to the proper officer's office, registered post or speed post, with acknowledgement.

We always file three days before the deadline, never on the last day. Portal issues, network failures and last-minute factual gaps surface when there is buffer; they kill you when there is none.

Day 31 to Day 60: hearing preparation

Personal hearing is granted under Section 75(4) on request or where adverse decision is contemplated. Use it. The adjudicator who has read 80 replies that month will give weight to the registrant whose representative shows up, walks them through the file, answers questions on the spot.

Prepare the brief. Three documents: (a) one-page summary of the matter, (b) timeline of events, (c) annexure index. Train the representative on every transaction in the file. They should be able to answer 'on which page of the annexure is the invoice for ABC Pvt Ltd from October 2023' without flipping pages.

Day 61 to Day 90: attend hearing, await order

The hearing itself is usually 20–30 minutes. The adjudicator asks specific questions. The representative answers them. No grandstanding. No legal arguments not in the reply. If a new point comes up that needs research, ask for time and submit a supplementary in 5 days.

The Order-in-Original arrives, typically within 30–45 days of the hearing.

Day 91 to Day 100: appeal or accept

Section 107 appeal to the Commissioner (Appeals) must be filed within 3 months of the order. Pre-deposit: 10% of disputed tax (capped at ₹25 crore for CGST). If the matter is worth appealing, file by Day 100, not by Month 3.

Section 50 interest continues to accrue at 18% per annum on the disputed amount until paid or appealed with pre-deposit. The cost of waiting is real. A ₹2 crore disputed tax accruing 18% interest for 12 months while you decide whether to appeal is ₹36 lakh of avoidable interest.

Most GST notices are won or lost in the first 30 days, not in the appellate forum two years later. The reply file built carefully in week one prevents the litigation in year three.

What we do at engagement

Two things. First, we triage the notice within 48 hours of receipt — kind of notice, period, allegations, indicative exposure, probability triage. The client gets a one-page brief before they panic. Second, we run the 100-day calendar as a project plan with named owners and dates, not as a vague 'we'll respond before the deadline'.

The notice cycle is procedural. Treat it procedurally and it shrinks. Treat it emotionally and it escalates.