A show cause notice arrives, somebody scrolls to the bottom, and the number there decides the mood of the next week. From that point the business does one of two things: it starts assembling an explanation of its accounts, or it starts working out whether it can simply pay. Both reactions skip the provision that governs everything that follows. Section 75(7) of the CGST Act says that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice — and that no demand shall be confirmed on the grounds other than the grounds specified in the notice. Read those two limbs again, because together they change what the document is. The figure is not an estimate that might grow once somebody starts looking. It is a ceiling, and it can only come down. And the grounds listed are not examples of the department’s concerns — they are the only grounds on which any order can ever be confirmed. So a show cause notice is not the opening of an open-ended inquiry into your business. It is the department drawing a line around its own case, in writing, and handing you the drawing. Which rearranges the first hour completely. Not explaining the accounts — extracting the grounds, each with its amount and its period, together with the section and the financial year the notice is issued under. That list is the entire scope of the matter, and almost nobody makes it before replying. Two more provisions decide how the rest goes. Section 75(4): a hearing is granted where a request is received in writing — so it has to be asked for, in terms, and businesses that assume it is automatic are the ones who complain afterwards. And section 75(6): the order must set out the relevant facts and the basis of the decision, which is precisely why a reply answering each ground separately is worth more than one that argues in general. Where we stop: we print no limitation months, no penalty percentages and no thresholds, because which set applies to you turns on your own notice’s section and financial year. We do not take positions on classification or valuation — those belong to your chartered accountant. And we will never tell a business a notice is small enough to ignore.
What this guide covers
Start where almost nobody starts, which is with what kind of document this is rather than with what it says.
The instinctive reading of a show cause notice is that the department has begun looking at your business and this is the first thing they have found. On that reading the number is an opening position, the grounds are examples, and the risk is open-ended. It is a frightening reading and it is wrong.
The Act treats the notice as a boundary on the department’s own case. Once it is issued, both the amount and the reasons are fixed. Everything that follows happens inside the lines it drew.
The provision is one sentence and it does two separate things, which is why it is worth reading slowly.
The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice, and no demand shall be confirmed on the grounds other than the grounds specified in the notice.
Limb one is about the quantum. Limb two is about the reasons. Most people who have heard of this provision know the first and not the second, and the second is usually the more useful of the two.
Take the first limb on its own, because of what it does to the week after a notice arrives.
The figure in the notice is the maximum exposure of that notice. Not a provisional estimate, not a starting point for discussion. Whatever happens at adjudication, the order cannot demand more.
Which means the worst case is already known on day one. That is unusual and it is worth saying out loud to whoever in the business is losing sleep: the number on the page is the ceiling, and every good thing that happens from here reduces it.
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Now the second limb, which is the one that shapes the work.
No demand may be confirmed on grounds other than those specified in the notice. So the reasons set out in your notice are a closed list. A ground that occurs to anybody later, however good, cannot carry the order.
That is a real constraint on the department and a real advantage to you, and it is the reason the first task is extraction rather than explanation. The notice has told you, in writing, the complete set of things you have to answer.
It also explains why a vague ground is a problem for the notice rather than for you. A ground has to be specified to be a ground, because the order can only rest on grounds that were.
Put the two limbs together and the document changes character in a way that is practically useful rather than merely reassuring.
An open-ended inquiry would have to be managed defensively: say as little as possible, do not volunteer, assume anything you disclose can be used. That is how people instinctively treat a tax notice, and it produces thin, cautious replies.
A bounded case is managed in the opposite way. You know the complete list of allegations and the maximum amount. The task is not to limit exposure — the Act has already limited it — but to answer everything on the list as completely as the documents allow.
So the sequence most businesses follow is backwards, and correcting it costs nothing.
What usually happens: the notice circulates, the accountant is asked what it is about, and everybody starts reconstructing the transactions that seem to be in issue. Days go into that before anybody has established what is actually being alleged.
What should happen: read the notice once for its structure, not its merits. Which section. Which financial year. Which periods. How many separate grounds. What amount against each. When is the reply due.
Six facts, none of which require your records. They can be established in twenty minutes by anybody who can read, and until they exist nobody can sensibly decide anything — including whether to pay.
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The central piece of that hour deserves its own section, because it is the one step that makes everything after it easier.
A notice reads as one large problem. It is almost always four, five or six smaller ones that have been served together. Separating them is the whole trick.
Write one line per ground: what is alleged, which period, which amount, and which document would answer it. Where the last column is blank, you have found the work. Where it is obvious, you have found the ground you will probably win.
The effect on a worried business is immediate and it is not a trick. Eighteen lakh as one number is frightening. Eighteen lakh as five numbers, two of which are answerable from records in the next room, is a task.
Closing this first group with the framing to carry into everything that follows.
A show cause notice is written in the language of allegation, and it is natural to receive it as an accusation about the business and the people in it. That reading is understandable and it makes the work harder, because it invites a defensive reply rather than a complete one.
The more accurate reading is structural. The department has examined something, formed views, and been required by the Act to state them in a document that then limits it. What you are holding is the limit.
You are not being asked to prove your business is sound. You are being asked to answer a specific, finite and already-written list.
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The second fact to establish, and it changes more than anything else on the page.
Every demand notice is issued under a section, and the section is stated on it. That single reference tells you the limitation position, the penalty position, and what the department is actually alleging about the reason for the shortfall rather than merely its amount.
Businesses read the amount and skip the section. The amount tells you what is at stake. The section tells you what kind of case it is, and the two are not the same question.
And the section available depends on the period, which is a recent change and is the thing most likely to be got wrong just now.
For periods up to the financial year 2023-24, demands run under sections 73 and 74. From the financial year 2024-25 onwards, they run under section 74A, which was inserted by the Finance (No. 2) Act, 2024.
So two notices sitting on the same desk, for the same kind of issue, can be under different sections with different rules, purely because they cover different years.
Which is exactly why general advice is dangerous on this subject right now. A consultant, an article or a colleague describing what happened on their notice may be describing a different statutory regime, correctly, for a different year.
The ordinary case, for periods up to 2023-24.
Section 73 deals with tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilised, for any reason other than fraud, wilful misstatement or suppression of facts.
Which covers most real disputes: a classification taken one way by the business and another by the department, a reconciliation difference, a credit claimed on a view that turns out to be contested, an error. These are ordinary commercial and interpretational matters, and the Act treats them as such.
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The same defaults, for the same periods, where the reason is different.
Section 74 applies where the shortfall arises by reason of fraud, or any wilful misstatement or suppression of facts to evade tax. It carries a longer period and heavier consequences, and that is deliberate — it is meant for a different kind of case.
It is worth understanding that the difference is not about how much is involved. A large demand on an interpretational point belongs in section 73; a small one involving concealment belongs in section 74. The size of the figure says nothing about which section is right.
Now the part that matters to any business that has received a notice under that section and knows it has done nothing of the kind.
The words are specific: fraud, or wilful misstatement, or suppression of facts to evade tax. Each has content. Wilful means deliberate. Suppression to evade means withholding something with a purpose. These are not synonyms for having got something wrong.
Which means the ingredients have to be alleged — set out as facts in the notice — and then made out. They are not satisfied by the department naming the section at the top of the page.
Stated separately because it is the single most useful point available to a business in this position, and it is frequently not taken.
A notice that invokes the fraud provision but describes only an ordinary shortfall — a mismatch, a credit question, a classification difference — has not alleged the ingredients. It has alleged a shortfall and applied a label to it.
So that becomes the first point in the reply, before any figure is discussed. Not as an expression of hurt feelings, which is how it usually comes out, but as a legal submission: the ingredients of the section invoked are not made out on the facts alleged, and here is why.
It is a point that needs taking properly by somebody who will stand behind it, which is why we say plainly that it belongs with your chartered accountant or counsel rather than with a drafting service.
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For periods from the financial year 2024-25, both kinds of case run through one section, and it is worth knowing why that was done.
Under the old structure, the choice of section determined the timeline as well as the penalty, which meant the department’s characterisation of your conduct also decided how long it had. Section 74A separates those: one set of timelines for everything, with the fraud or non-fraud character still deciding the penalty.
So under the new section the label matters for what it costs, not for how long they have. Which is a cleaner arrangement, and it does not make the fraud allegation any less worth contesting — it simply means contesting it is about the penalty rather than about the limitation.
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Being precise about the parts that carry over, because the continuity matters more than the change.
Unchanged: the distinction between fraud and non-fraud cases, and what the fraud limb requires. Unchanged: the structure of payment windows that conclude proceedings. Unchanged, and most importantly for this page, the whole of section 75 — the ceiling, the closed list of grounds, the written hearing request, the speaking order and the three adjournments apply to all of it.
Which is reassuring for a reader. The provisions this page is actually built on did not move. What moved is the timeline and the length of one window, and both of those are stated on your own notice.
A deliberate omission, and it deserves an explanation rather than being left to look like a gap.
We could set out the limitation months and the penalty percentages for each section in a neat table. We have not, for one reason: which set applies to you depends on the financial year your notice covers and on whether the fraud ingredients are alleged, and a business reading figures off a general page is at real risk of applying the wrong year’s rule to its own notice.
That risk is not theoretical just now. With two regimes running side by side — one for years up to 2023-24 and one from 2024-25 — a confidently stated figure is wrong for half the people reading it.
So the instruction that replaces the table is short and it is better advice.
Your notice states the section it is issued under and the period it covers. Those two facts, read together, settle which rules apply to you, and they are printed on the document in your hand rather than on any page on the internet.
Take them to whoever is advising you and ask the question in that form: this is the section, this is the year, what is the position. An adviser answering that question is answering about your notice. An adviser answering in general is answering about somebody else’s.
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Now the part of the scheme that is genuinely designed in the taxpayer’s favour, and which a surprising number of businesses discover after it has shut.
The Act does not only provide for demands to be adjudicated. It provides, at several points, for a matter to be concluded on payment, with a reduced penalty or none at all, if the payment is made early enough.
That is a real commercial option and it should be priced before any decision is taken to contest. Not because contesting is wrong, but because the cost of each course can only be compared once both are known, and one of them expires.
The earliest and cheapest of the windows, available before a show cause notice is issued at all.
Where a business identifies a shortfall itself, or is told informally of one, paying the tax with interest and informing the officer in writing concludes the matter on the most favourable terms the Act offers.
The practical difficulty is that it requires the business to know. Which is an argument for the periodic reconciliation that nobody enjoys doing — our accounting services and bookkeeping pages cover that side, and GST return and GST amendment cover correcting what the reconciliation finds. Exporters should check the letter of undertaking position at the same time, since a lapsed one generates exactly this kind of demand a year later.
And the moment the department itself offers, which has a form number and almost no reputation.
Before issuing a show cause notice, the officer often communicates the details of what is said to be payable, in an intimation. It is not a notice. It does not demand a reply in the same way. It frequently arrives on a portal and is set aside precisely because it is not labelled as urgent.
It is the cheapest point in the entire process, and ignoring it is how a correctable issue becomes a formal demand with penalty attached. The whole machinery of this page — grounds, replies, hearings, orders — begins only after it has been passed over.
Worth dwelling on, because the economics here are stark and almost nobody sees them at the time.
At the intimation stage the issue can often be closed by paying tax and interest, or by explaining why nothing is payable, in a letter. No formal reply. No annexure index. No hearing. No order. No appeal.
Once a show cause notice issues, every one of those becomes a possibility and several become necessities, and the professional cost of dealing with it rises accordingly even where the underlying amount has not changed at all.
So the single highest-return habit for any GST-registered business is to treat portal communications as mail rather than as noise. An intimation answered in week one is a letter. The same issue in month six is this page.
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And the window that remains open after a notice has issued, which is the one most relevant to anybody reading this with a notice in hand.
Paying the tax and interest within the period the Act allows after service concludes the proceedings, with no penalty in an ordinary case and a reduced one where the fraud limb is invoked. The length of that period differs between the older sections and section 74A, which is another reason to check your own notice rather than a general description.
The important point is not the length. It is that the window is measured from service, like everything else, and that it closes while the business is still deciding whether it agrees. Deciding slowly is itself a decision.
There is a further stage where the fraud limb is involved, and it is worth knowing it exists even if nobody plans for it.
Where an order has been made, payment within a period after it still attracts a lower penalty than letting it stand unpaid. The graduation is deliberate: the Act prices early resolution at every stage, and the price rises at each one.
It is not a plan, in the same way that a delay application is not a plan. It is a repair that exists, and knowing it exists occasionally changes a decision after a bad order.
Now the part most pages on this subject avoid, because it is uncomfortable.
Paying is not an admission of anything in any sense that matters commercially, and contesting is not a point of principle. Both are decisions about where money and time are best spent, and they should be taken that way rather than emotionally.
The arithmetic that actually matters: what the ground costs if paid now, against what it costs if contested and lost, plus what contesting costs either way, discounted by how likely you are to succeed. That is a business calculation, and it is different for each ground on the same notice.
Which is why the grounds grid is not an administrative nicety. It is the only form in which that calculation can be done at all.
And the option that resolves most notices sensibly, which businesses routinely do not realise is available.
You do not have to take one position on the whole notice. A reply can accept certain grounds and pay what is due on them, while contesting the others on evidence.
That is frequently the strongest reply there is, and it reads very differently from a blanket denial. A business that concedes what is conceded and disputes the rest with documents is telling the officer that the disputed part has been thought about, which a denial of everything never does.
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Closing this group with the rough guidance, offered as a way of sorting rather than as advice on anybody’s facts.
Grounds that rest on an arithmetical or reconciliation difference you can see is correct are usually paid. Grounds that rest on a view of a transaction that you and your accountant genuinely hold differently are usually contested, because that is what the adjudication process is for. Grounds that rest on something a third party did or failed to do are the hardest and need real advice.
And one that is almost always worth contesting regardless of amount: an allegation under the fraud limb where the ingredients are not made out. That one is not only about this notice. It is about the characterisation, which carries further than the figure attached to it.
Worth settling before any drafting, because businesses often write the wrong document very well.
A reply is not an explanation of how the business operates. It is not a protest. It is not an account of how careful everybody has always been. It is an answer to a specific, finite list of allegations, and its only job is to deal with each one.
The test to apply to any draft: take each ground from the notice in turn and find where in the reply it is answered. If you cannot find it in ten seconds, neither will the officer, and a ground that cannot be found has not been answered.
One mechanical thing before any of that matters: the reply is filed on the portal and signed with a valid digital signature. A certificate that expired quietly months ago is discovered on the evening of the due date more often than anybody would like, so check it in the first hour along with the dates — our class 3 DSC and digital signature pages cover getting one in place.
Which produces the single structural decision that makes a reply work, and it is not a stylistic preference.
Answer each ground separately, under its own heading, in the notice’s own order and using the notice’s own numbering. Not thematically. Not in the order that suits your narrative. In theirs.
The reason is practical. The officer is working through the notice ground by ground, because that is what the order has to do. A reply arranged the same way can be read alongside it; a reply arranged differently has to be translated first, and the translation is done by somebody with a lot of files.
It also makes omissions visible to you before they are visible to them. A reply in the notice’s order has an obvious gap where a ground has not been dealt with. A thematic reply hides that gap from its own author.
And the provision that gives the ground-by-ground structure its quiet strategic value.
Section 75(6): the proper officer shall, in his order, set out the relevant facts and the basis of his decision.
An order has to say what it decided and why. It cannot simply recite the notice, note that a reply was received, and confirm the demand — that is not setting out the basis of a decision.
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Put the two together and a reply acquires a second function beyond persuading.
If the order must set out the basis of the decision, and your reply has answered six grounds separately with a document attached to each, then a short order confirming everything has six separate things to deal with. It is not impossible to write, but it is noticeably harder to write badly.
Whereas a reply that argues generally invites an order that responds generally. You cannot complain that an order did not engage with your points if the points were not separated enough to be engaged with one at a time.
This is the most useful thing about drafting that we can offer on this page, and it costs nothing but structure.
On what goes with the reply, and the principle is simple enough to state in a line.
A ground alleging a figure is answered by the document that shows the figure. A ground alleging a mismatch is answered by the reconciliation. A ground alleging a credit was not available is answered by the invoice, the payment and whatever else the position rests on.
Assertions do not answer documents. A sentence saying the credit was properly availed, with nothing behind it, is weaker than a sentence conceding a figure honestly.
And index them against the grounds, not chronologically. Annexure 3 should be findable as the answer to ground 2, not as the third thing that happened. Where certified copies of anything are needed, certified true copy work covers obtaining them.
Listed without softening, since every one of them turns up routinely and every one costs the person who wrote it.
Complaints about the department or the officer. Speculation about why the notice was issued. Comparisons with how other taxpayers are treated. General statements about the business’s integrity in place of an answer. Promises about future compliance offered instead of dealing with the past. And anything that cannot be documented.
The one that does the most damage is the integrity paragraph, because it feels so natural to write. A family business of thirty years genuinely wants to say so. But it does not answer a ground, it occupies the space where the answer should be, and it signals that the writer had nothing better.
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Asked constantly, and the honest answer is that length is the wrong measure.
A reply should be as long as the grounds require. Six substantive grounds with documents will produce a longer reply than two, and neither length is right or wrong in itself.
The measure that matters is coverage. Every ground answered, every answer evidenced, every annexure findable. A short reply that does all three is complete. A long one that argues eloquently about two grounds and is silent on the third has conceded the third, whatever it weighs.
A point that is sometimes available and is worth checking before it is too late to take.
Demands have outer time limits, measured from a reference date and differing between the sections. Where a notice appears to have issued outside the period applicable to it, that is a threshold point that goes to the notice itself rather than to any individual ground.
We do not state the periods on this page for the reason given earlier, and we would not have a business take this point on its own reading. What we would say is: check the dates against your section and your year, and if something looks wrong, raise it with your adviser early, because threshold points are strongest when taken first.
A common and genuinely awkward situation, and the handling is counter-intuitive.
Where a ground is stated so broadly that it is not clear what is being alleged, the instinct is either to guess and answer the guess, or to write back asking for clarification and let the clock run.
The better course is to do both in the reply itself. Say that the ground is not specified with enough particularity to be answered, state what you have understood it to mean, and answer it on that basis. You have then preserved the point and also not left a ground unanswered.
It connects back to section 75(7): grounds have to be specified, because the order can only be confirmed on grounds that were. A ground too vague to answer is a ground with a problem of its own.
Now the procedural step that is missed more often than any other, and it costs nothing to get right.
The personal hearing is not automatic on every notice. It has to be requested, in writing, and the place to make the request is inside the reply.
Businesses file a reply, wait, receive an order, and feel they were never heard. Frequently they were not — because nobody asked. It is one sentence, and leaving it out is the most expensive omission available on a reply form.
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The provision itself, because it is short and it is worth knowing exactly what it promises.
An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person.
Two routes, and the second is not within your control. Either you ask in writing, or an adverse decision is contemplated. Relying on the second means relying on somebody else’s state of mind, when the first is available for the cost of a sentence.
Being specific about how the omission actually happens, because it is not carelessness.
The portal reply has fields. Somebody fills them, attaches the document, and submits. Nowhere in that process does anything prompt the question of whether a hearing has been requested, and the reply attachment was drafted to answer the grounds, which it does.
So the request falls between the form and the document, which is exactly the kind of gap that produces consistent errors in otherwise careful organisations.
The fix is a habit rather than a skill: the hearing request goes in the reply, in its own short paragraph, every time. It costs a line and it preserves the most useful procedural right in the whole process.
And the limit on the flexibility available once a hearing is fixed.
Section 75(5) allows the proper officer to adjourn, for reasons recorded in writing, where sufficient cause is shown — with a proviso that no such adjournment shall be granted more than three times during the proceedings.
Three is not many, and they are easy to spend badly. An adjournment because the accountant is travelling is the same adjournment as one taken to obtain a document that will decide a ground. Treat them as a limited resource from the first one.
Expectations here are usually either too high or too dramatic, and the reality is neither.
It is not a trial. There is no evidence led, nobody is cross-examined, and it is frequently short. The officer has the notice and the reply, and the hearing is an opportunity to put the reply orally and answer questions about it.
Brevity is not a bad sign. An officer who has read the reply and has two questions is in a better position than one who has to be taken through the whole matter aloud.
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A practical question with a clear answer, and it is often answered wrongly out of seniority rather than usefulness.
Whoever can answer questions about the figures without checking. In most businesses that is the chartered accountant or the person who maintains the records, not the proprietor and not the most senior person available.
Somebody who has to say they will check and revert is spending one of three adjournments to do it. The purpose of attending is to answer; anybody who cannot answer is attending to listen, and that can be done by one person rather than three.
Worth understanding, because it shapes the preparation.
It is the point at which anything unclear in the reply can be cleared up, and the point at which the officer’s actual concerns become visible. Those concerns are frequently narrower than the notice suggested, and hearing them is worth more than anything said in return.
So the best preparation is the grounds grid, carried in and open. Whatever is asked about can then be found immediately, with its document, and the answer is given in the hearing rather than promised for later.
And listen for what is not asked about. A ground the officer does not raise is often a ground the reply has already dealt with.
One short step that is frequently skipped and occasionally matters a great deal.
If anything was said at the hearing that is not in the reply — a clarification given, a document promised, a figure corrected — put it in writing afterwards and file it. Briefly, factually, and without re-arguing anything.
The reason is the speaking-order rule again. An order has to set out the basis of the decision, and the basis is built from what is on the file. A clarification given only orally may be acted on, and may equally be forgotten by the time the order is written weeks later.
Then keep a note of the date, who attended, and what was asked. If an appeal follows, that note is worth more than anybody’s recollection of the same morning.
Almost always a business that has just opened the portal and found something it was not expecting, and the three groups differ mainly in how much time is left.
The largest group have a notice with weeks still on it and a figure that has alarmed everybody. For them most of the work is reading, and the relief when the ceiling point is explained is usually visible.
A second group have an intimation rather than a notice and are unsure whether it counts. It does count, it is the cheapest point in the whole process, and treating it as junk is the error.
The third have very little time left, often because the notice went to a portal nobody checks. That changes what is worth doing, and the first conversation is about triage rather than about the merits.
Not drafting. Reading, with a particular object.
We take the notice and extract, in a list, every separate ground it alleges, the figure attached to each, the period each relates to, and the section it is issued under. Nothing else at that stage.
That list is the whole shape of the matter, and it rarely exists anywhere before somebody makes it. A notice reads as one large problem. The list turns it into four or six smaller ones, several of which usually turn out to be answerable from records you already have.
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Then that list becomes a grid, because the grid is what the reply gets written from.
One row per ground. Columns for what is alleged, what the period is, what the amount is, what our answer is, and which document proves it. Any row where the last two columns are empty is a row that needs work before anything is filed.
It sounds administrative and it is the single most useful hour on the file. A reply written from a grid answers everything; a reply written from the notice read top to bottom reliably misses one.
The reply itself, and the things around it that people forget.
A reply answering each ground separately and in the notice’s own order, with the annexures indexed and cross-referred ground by ground. A written request for a personal hearing, in terms, inside the reply. A note on the limitation and section position where there is a point to take. And an index of what was filed, with the acknowledgement kept.
Where figures have to be reconciled before any of that can be written, that is accounting work rather than drafting, and our accounting services and bookkeeping pages cover it. A notice covering an older year frequently sends a business back to its income tax return for the same period too, because the two sets of figures have to tell one story.
A real limit, and it is worth being honest about where it falls.
We do not take positions on contested questions of classification, valuation or interpretation. Whether a supply falls in one entry or another, whether a credit was properly available on particular facts, whether a transaction was what the department says it was — those are questions for a chartered accountant or a tax counsel who will stand behind the answer.
What we do is make sure that whatever position your professional takes is actually put, in writing, against the right ground, with the right document attached, inside the period, with the hearing asked for. A good position badly filed loses to a modest position filed properly, and the filing is the part that is routinely done in a hurry.
Worth naming before anybody needs it, because on tax matters the professional boundaries are crowded and people are often unsure who does what.
Assembling the grounds, drafting the reply around a position, indexing annexures, filing and tracking — documentation. The position itself, and anything adversarial that follows an order, belongs with a chartered accountant or with counsel depending on what it is.
Court work is for your advocate, whose fee is engaged and paid by you directly; we do not quote, collect or share it. If what you want first is a single conversation to work out how serious the notice actually is, consultation online or over a video call is the sensible way to spend an hour before committing to anything larger.
Where the matter has already moved past the adjudicating officer, GST appeal filing is the next page rather than this one. And where the dispute is with a supplier rather than with the department — a credit lost because somebody else did not file — that is a commercial recovery and a legal notice on an advocate’s instructions is the instrument, not anything in this process.
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Four things, and we would be suspicious of anybody offering them.
That the demand will be dropped. That a particular ground will succeed. That the officer will take a particular view of a document. Or that the matter will end at adjudication rather than going further.
And one more, which is specific to this subject. We will never tell a business that a notice can be safely ignored because the amount looks small or the ground looks weak. An unanswered notice is decided on what the department has, and the weakest ground in the world succeeds against silence.
Most businesses with a GST notice already have somebody doing their returns, and the sensible arrangement is obvious once stated.
They know the figures and the history. We know how to turn a position into a document that answers a notice ground by ground, asks for the hearing in writing, and is filed with its annexures indexed. Those are different jobs and neither is a substitute for the other.
The arrangement that works: they settle what the answer is, we settle how it is put. We are entirely comfortable working to a position somebody else has taken, and we will say so if the position seems to us to need a second opinion rather than a better draft.
One folder, kept from the first day, and it saves real money if the matter goes further.
The notice as served, with the date. Any earlier intimation. The grounds grid. The reply as filed with its annexure index. The acknowledgement. The hearing request and any notice of hearing. A note of what was said at each hearing and on what date. And the order, when it comes.
If an appeal follows, that folder is the appeal’s raw material, and assembling it afterwards from memory and portal downloads costs more than keeping it did. Our legal file management work exists for businesses that would rather it was held properly.
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One figure, and then the part that matters more than the figure.
₹4,999, with our side generally running 7 – 15 days.
That covers the notice read and the grounds extracted into a grid, the reply drafted ground by ground around the position you or your professional settle, the annexures indexed and cross-referred, the written hearing request, the limitation and section note where there is a point, and the filing with its acknowledgement.
Set apart deliberately, because on tax work the boundaries between professionals decide who is responsible for what.
Outside it: the tax position itself, which belongs to your chartered accountant or counsel; reconciliation and accounting work, covered by accounting services; appearance at the hearing where you want a professional to attend; any tax, interest or penalty payable; appeal work, which is GST appeal filing; and anything on the income-tax side, which has its own statute and its own pages.
On the span: it describes drafting and filing once the position is settled. It does not describe how long your own reconciliation takes, which on a notice covering several periods is frequently the longer half.
A short warning, since of everything here this is the only item with no repair available once it has gone.
The period to reply runs from service, and it runs whether or not anybody in the business has looked at the portal. There is no provision that starts it from the day you noticed.
Which makes somebody checking the portal a named job rather than a habit. In most businesses that fall behind, nobody had been told it was theirs, and the notice sat unopened through most of its period while everything else was running normally.
If a notice has just arrived, this is the hour that decides how the rest of it goes, and none of it requires a professional.
One. Write down the date of service and the date the reply is due.
Two. Note which section it is issued under, and which financial year it covers.
Three. List each separate ground with its amount.
Four. Check whether a payment window is still open and what it would cost.
Five. Decide who in the business owns this file.
Five items. Everything else — the reconciliation, the position, the drafting — follows from them, and all of it goes better for having been done on the first day rather than the twentieth.
Place Order — no advance, pay after work
It happens, and what to do depends entirely on whether an order has been made.
If no order has issued yet, file anyway, with an explanation. A late reply on the record is better than no reply, the officer still has to pass an order, and a reply in front of them is harder to leave unanswered than an empty file.
If an order has issued, the reply stage is over and the question is the next forum rather than this one. That is appeal territory, it has its own period, and GST appeal filing is where it is dealt with.
What does not help in either case is a second attempt at the same explanation in a more emphatic tone. The route changes once an order exists, and the document that works is a different document.
Worth knowing in advance, because two checks on the day the order arrives are worth more than a month of worrying beforehand.
First: does the amount demanded exceed the amount in the notice? Second: does the order confirm anything on a ground the notice did not specify? Both are measured against the notice, and both are questions you can answer yourself in ten minutes with the notice and the order side by side.
And a third, from the same part of the Act: does the order set out the relevant facts and the basis of the decision? An order that recites the notice and concludes, without engaging with what you actually said, is not what section 75(6) describes — and whether it is worth pressing that point is something your advocate decides on your own facts.
Two narrower routes exist alongside an appeal and are worth knowing about. Where the order carries an error that is apparent rather than arguable — a figure carried wrongly, a period misstated — a rectification application is the smaller and faster instrument. And where the dispute has left you out of pocket on a refund that was due all along, refund follow-up is a separate exercise that nobody remembers to start.
Place Order — no advance, pay after work
Everything on this page comes back to a single provision, and it is the one to carry into the first reading of any notice.
The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice, and no demand shall be confirmed on the grounds other than the grounds specified in the notice.
A show cause notice is not the beginning of an open-ended inquiry into your business. It is the department drawing a line around its own case, in writing, and handing you the drawing.
If the order has already been passed, the next step is governed by money rather than by dates: section 107(6) says no appeal shall be filed unless you have paid, and the ten per cent attaches to the disputed tax alone. See GST appeal filing for the clause (a) and clause (b) arithmetic.
A good many of these notices start from a period in which the business was not registered and should have been. Whether it should have been turns on a provision that overrides every turnover figure, not on the figure itself: see our GST registration page.
The figure at the bottom of a GST show cause notice frightens people into either paying or panicking, and both reactions skip the provision that governs everything afterwards. Section 75(7) of the CGST Act says the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice, and that no demand shall be confirmed on grounds other than the grounds specified in it. So the number is a ceiling rather than an estimate, and the grounds listed are the only grounds that can ever support an order. That changes the first hour completely: instead of explaining your accounts, you extract the grounds into a list, note the section and the financial year the notice is issued under, check whether a payment window is still open, and ask for the hearing in writing, which section 75(4) requires you to do. What we then do: build the grounds into a grid, draft the reply answering each one separately in the notice own order around the position you or your chartered accountant settle, index the annexures ground by ground, put the hearing request in terms, and file with the acknowledgement kept. What we do not do: take positions on classification, valuation or interpretation, which belong to your accountant or counsel; promise that any ground will succeed; or tell anybody that a notice is small enough to ignore.
Four sections of one Act, and one of them does most of the work. The Central Goods and Services Tax Act, 2017. Section 75 carries the provisions this page is built on: sub-section (4), under which an opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty, or where any adverse decision is contemplated against such person; sub-section (5), under which the proper officer may adjourn a hearing for reasons recorded in writing where sufficient cause is shown, with a proviso that no such adjournment shall be granted more than three times during the proceedings; sub-section (6), under which the proper officer shall in his order set out the relevant facts and the basis of his decision; and sub-section (7), under which the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice. Also sub-section (13), under which where a penalty is imposed under section 73, 74 or 74A no penalty for the same act or omission may be imposed on the same person under any other provision. Sections 73 and 74 govern determination of tax for periods up to the financial year 2023-24, section 74 applying where the shortfall arises by reason of fraud, or any wilful misstatement or suppression of facts to evade tax, and section 73 covering the same defaults for any other reason. Section 74A, inserted by the Finance (No. 2) Act, 2024, applies from the financial year 2024-25 and brings both kinds of case under one set of timelines while keeping the distinction for the penalty, with a sixty-day payment window in place of the earlier thirty.
What we have deliberately kept out. We print no limitation months, no penalty percentages and no threshold figures on this page. Not because they are unknowable, but because which set applies to you turns on the financial year your notice covers and on whether the fraud ingredients are alleged, and a business reading a figure off a general page is at risk of applying last year’s rule to this year’s notice. Your own notice states its section and its period, and those two facts settle it.
Which professional owns which piece. Your chartered accountant, for the reconciliation and for the tax position itself. Counsel, for anything adversarial after an order, and from the first reply where fraud is alleged. Our GST appeal filing page for what follows an order; GST notice reply for the ordinary notices that are not show cause notices; GST return, GST amendment and GST refund for the filings a notice often turns out to be about; GST cancellation and GST registration for the registration side; and on the income-tax side, which is a different statute entirely, our income tax notice reply, TDS default notice reply, section 148 reassessment reply and income tax appeal pages.
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