Received a GST Notice (DRC-01)? Here’s Exactly What to Do in the First 48 Hours
A GST notice has a clock attached. What you do — and don’t do — in the first two days often decides whether it ends in a clean closure or a tax demand with interest and penalty. Here’s the calm, step-by-step playbook.
Quick Answer
Don’t panic and don’t ignore it. In the first 48 hours: (1) read the notice carefully and note the section (73 vs 74) and reply deadline, (2) download it from the GST portal and verify its authenticity, (3) gather the returns and invoices it references, (4) do not pay or admit anything before a professional assessment — early payment can slash penalties, but only if the demand is actually valid, and (5) get a CA to map your reply strategy before the deadline pressure builds.
What a DRC-01 Actually Means (and Doesn’t)
A DRC-01 is a proposal, not a final demand. The department believes tax was short-paid, ITC was wrongly availed, or turnover was under-reported — and it is legally required to hear you before confirming anything. Many notices we defend in Vadodara arise from mechanical data mismatches (GSTR-1 vs 3B, GSTR-2B vs claimed ITC) that a proper reconciliation fully explains.
The critical distinction is the section:
- Section 73 — non-fraud cases. Penalty is 10% of tax (min ₹10,000), and can be zero if you pay tax + interest within 30 days of the notice.
- Section 74 — fraud, wilful misstatement or suppression. Penalty up to 100%, reducible to 25% if paid within 30 days of notice. These need aggressive, well-drafted defence.
Your First 48 Hours: Step by Step
Verify and download the notice
Log in to the GST portal → Services → User Services → View Notices and Orders. Confirm the notice exists there with a valid DIN/reference number — fake “GST notices” by email and WhatsApp are a real scam. Download the DRC-01 and its annexure.
Hour 0–2Note the section, period, amount and deadline
Write down: Section 73 or 74, tax periods covered, tax/interest/penalty proposed, the officer’s jurisdiction, and the reply due date. Diarise the deadline minus 7 days — that’s your real deadline.
Hour 2–4Pull the underlying data
Gather GSTR-1, GSTR-3B, GSTR-2B and GSTR-9 for the periods, sales and purchase registers, e-way bills, and the specific invoices the annexure references. Most demands live or die on this reconciliation.
Hour 4–24Do NOT reply, pay, or visit the officer yet
A rushed admission or casual reply becomes evidence. Equally, paying blindly “to close the matter” can mean paying a demand that was never sustainable. Strategy first, action second.
OngoingGet a professional assessment
A CA reviews whether the demand is valid, partly valid, or defective — and whether early payment (to cut penalty) or full contest (with case law and reconciliations) is the smarter path. Our Vadodara team commits to a same-day/48-hour first assessment for DRC-01 and detention matters.
Hour 24–48Holding a GST Notice Right Now?
Send it to us today — our Vadodara CA team responds within 48 hours with a clear assessment: what the department is claiming, whether it holds, and exactly how we’ll reply.
The 5 Costliest Mistakes We See
- Ignoring it — leads to an ex-parte order and bank attachment. Always the worst option.
- Replying casually on the portal — a two-line reply without reconciliation locks you into weak grounds for appeal.
- Paying without analysis — many DRC-01s overstate demands or double-count; payment first, analysis never, is money gone.
- Missing the personal hearing — the hearing is your right; skipping it hands the officer an easy confirmation.
- Assuming Section 74 allegations will “get dropped” — fraud allegations need to be contested specifically, or the 100% penalty sticks.
Handled early and properly, a large share of notices close with dramatically reduced — or fully dropped — demands. The 48-hour window is where that outcome is won.
Your Questions, AnsweredFrequently Asked Questions
What is a DRC-01 notice in GST?
Form DRC-01 is the summary of a show-cause notice issued under Section 73 (non-fraud cases) or Section 74 (fraud/suppression cases) of the CGST Act. It states the tax, interest and penalty the department proposes to demand, and gives you a deadline to respond.
How much time do I get to reply to a DRC-01?
The notice itself specifies the date — typically 30 days. Under Section 73 the final order must come within 3 years of the annual return due date; under Section 74 within 5 years. Never assume the deadline; read the notice.
What happens if I ignore a GST notice?
The officer can pass an ex-parte order confirming the full demand with interest and penalty, and then initiate recovery — including bank account attachment. Ignoring a notice is the single most expensive mistake a taxpayer can make.
Can I pay the tax before replying and reduce the penalty?
Yes. Under Section 73, paying tax and interest before the notice (or within 30 days of it) can eliminate the penalty entirely. Under Section 74, early payment reduces penalty to 15–25% instead of 100%. This is exactly why a fast, professional assessment in the first 48 hours matters.
Do I need a CA or advocate to reply to a GST notice?
It is not legally mandatory, but a DRC-01 reply is a legal-technical document — the grounds you take (or miss) now bind you in appeal. A professional reply drafted with reconciliations and case law typically pays for itself many times over.
Don’t Face the Department Alone
From DRC-01 replies to Section 74 litigation defence, our Vadodara team has handled 500+ GST matters — including urgent same-day response for detained goods and tax demands.
