The Goods and Services Tax (GST) regime in India is designed to ensure tax compliance through transparency, digitization, and real-time monitoring. One of the mechanisms used by the government to ensure this compliance is the issuance of GST Notices. If you’re a registered GST taxpayer, receiving a notice from the GST department may seem alarming—but it’s also common.
This article explains what a GST notice is, its types, why it is issued, how to respond to one, possible penalties, and best practices to avoid receiving one in the first place.
What is a GST Notice?
A GST notice is a formal communication issued by GST authorities to taxpayers when there is a discrepancy, non-compliance, delay, under-reporting, or suspicion of tax evasion. It serves as an intimation that the taxpayer needs to either provide clarification, pay outstanding dues, or correct a mistake.
Notices are sent electronically on the GST Portal and also via email or SMS linked to the taxpayer’s GST registration.
Reasons for Receiving a GST Notice
Some of the most common reasons include:
- Non-filing or delayed filing of GST returns (GSTR-1, GSTR-3B, GSTR-9)
- Mismatch in sales/purchase invoices (GSTR-1 vs. GSTR-3B or vs. GSTR-2A/2B)
- Excess or ineligible claim of Input Tax Credit (ITC)
- Tax evasion or suppression of turnover
- Wrong HSN/SAC code usage or incorrect GST rate
- High-value cash transactions without proper invoices
- Failure to generate e-invoices or e-way bills when required
- Non-payment of GST despite tax collection
Types of GST Notices
There are several kinds of notices a registered person may receive. Here are the most common ones:
1. GSTR-3A Notice – Non-Filing of Returns
Issued when a taxpayer fails to file monthly or quarterly GST returns within the due date. It’s an intimation to comply before penalties are levied.
Action: File the pending returns immediately to avoid penalties and late fees.
2. Notice under Section 61 – Scrutiny of Returns
Issued when discrepancies are found in GSTR-1 and GSTR-3B or other returns.
Example: Your GSTR-1 shows ₹10 lakh in sales, but GSTR-3B reflects only ₹8 lakh.
Action: Respond with supporting documents or correct the returns if a genuine error exists.
3. Notice under Section 65 – Audit by Tax Authorities
Issued when the department conducts a tax audit of your business to check records and compliance.
Action: Cooperate with the audit and furnish required records—like books of accounts, invoices, and reconciliation statements.
4. Notice under Section 67 – Inspection/Search/Seizure
Issued when the department suspects tax evasion, fraud, or suppression of turnover.
Action: Serious in nature—consult a GST consultant immediately and ensure all documents are in order.
5. Notice under Section 73 – Tax Not Paid/Short Paid (Without Fraud)
Issued when tax has not been paid or short paid without fraudulent intention or suppression of facts.
Time limit: Within 3 years from the due date of filing the annual return.
Action: Pay tax with interest, or reply with evidence to defend your case.
6. Notice under Section 74 – Tax Not Paid (With Fraud)
Issued when tax is unpaid or underpaid with intention to evade tax, fraudulent documentation, or suppression.
Time limit: 5 years from the due date.
Action: Serious consequences. Legal assistance is recommended.
7. Show Cause Notice (SCN)
A notice asking the taxpayer to explain why action (penalty, recovery, or cancellation of registration) should not be taken.
Example: “Why should your registration not be cancelled for non-filing of returns for 6 months?”
Action: Provide a satisfactory reply with documentation within the stipulated time.
8. ASMT-10 – Discrepancy in Return Scrutiny
Issued when the officer finds inconsistencies during return scrutiny.
Example: ITC claim is much higher than eligible credit as per GSTR-2B.
Action: Respond within 15 days using form ASMT-11, along with explanations and records.
9. REG-03 – Clarification on GST Registration Application
Issued when the GST officer requires additional details for registration approval.
Action: Respond via REG-04 within 7 working days.
10. CMP-05 – Composition Scheme Violation
Issued to composition scheme taxpayers found ineligible or violating rules.
Action: Respond with justification or shift to regular taxpayer status.
How to Respond to a GST Notice
Step 1: Read Carefully
Login to the GST portal, download the notice, and read it thoroughly. Understand the section number, reason, and required response.
Step 2: Consult Your Accountant or GST Practitioner
Engage a qualified professional to evaluate the issue and draft a response.
Step 3: Prepare the Response
Prepare a written reply, attach relevant documents like:
- Sales/purchase invoices
- Return filings
- Reconciliation statements
- Payment challans
- Clarification letters
Step 4: File the Reply Online
Most notices have to be responded to through the “View Notices and Orders” section on the GST portal.
Step 5: Keep Acknowledgment
Save the acknowledgment, screenshots, and final response PDF for your records.
Penalties for Not Responding to GST Notices
Failure to respond or comply with a GST notice may lead to:
- Monetary penalties (up to 100% of tax amount)
- Interest on outstanding tax
- Suspension or cancellation of GST registration
- Blocking of e-way bills and e-invoicing
- Recovery of tax dues through bank account attachment
- Prosecution and imprisonment (in severe fraud cases)
How Accountants and Tax Consultants Help
✅ Analyze the Notice
A professional can interpret complex legal language and identify the issue.
✅ Draft Accurate Responses
Helps prepare well-structured replies with correct formats and attachments.
✅ Represent Before Authorities
In some cases, a Chartered Accountant or GST Practitioner can represent you during hearings.
✅ Preventive Compliance
Accountants ensure timely return filing, correct ITC claims, and avoid future notices.
Best Practices to Avoid GST Notices
- File GST returns on time (GSTR-1, 3B, 9, etc.)
- Reconcile GSTR-2A/2B with purchase invoices monthly
- Avoid claiming ineligible ITC
- Maintain proper books of accounts
- Ensure e-invoice and e-way bill generation as required
- Cooperate with audits and provide documents promptly
- Use automated GST filing software or a professional accountant
Conclusion
Receiving a GST notice is not necessarily a cause for panic. It’s a part of the government’s tax monitoring and compliance procedure. What’s important is how timely and accurately you respond to it. Whether it’s a minor discrepancy or a serious audit issue, always consult a qualified GST accountant or practitioner.
Staying proactive, maintaining proper records, and adopting sound accounting practices can help you avoid GST notices, minimize risks, and keep your business compliant.