GST notices in India have surged 45% in FY25 per CBIC data, with Rs. 1.2 lakh crore demands issued. Forms ASMT-10 (inspection), DRC-01 (demand) signal compliance gaps; 18% interest + 100% penalty applies without reply. This guide lists top reasons, responses, and preventive frameworks.
12 Primary GST Notice Triggers
- GSTR-2A/3B Mismatch: Claimed ITC > supplier upload; Rule 36(4) caps 5%/10% auto-disallowance.
- Non-Reversal of ITC: Blocked credits on cars, food (Notification 49/2019); proportionate reversal ignored.
- E-Way Bill Violations: Interstate >Rs. 50k without bill; validity mismatch (1 day/200km).
- HSN/SAC Misclassification: 18% supplies coded 12%; differential demand + interest.
- Late/Non-Filing Returns: GSTR-1/3B delays trigger auto-SCN; Rs. 200/day cap Rs. 10k.
- Fake Invoices/Circular 183: Bogus suppliers; ITC denial + penalty = tax + 100%.
- Branch Transfer Errors: IGST not charged on stock transfers; treated as supply.
- Excess Composition Turnover: >1.5cr threshold breach; retrospective regular taxpayer.
- Wrong Place of Supply: SEZ supplies taxed IGST vs zero-rated.
- Reverse Charge Mechanism (RCM) Default: GTA, legal services unpaid 18%.
- E-Invoicing Lapses: >5cr turnover non-compliance post-1.8.2023.
- Annual Return Discrepancies: GSTR-9 vs portal data variances.
Notice Types and Response Timelines
| Notice Form | Trigger | Reply Due | Reply Mode |
| ASMT-10 | Inspection | 15 days | Portal upload |
| DRC-01 | Demand | 30 days | DRC-06 reply |
| ASMT-14 | Audit | 30 days | Documents submit |
| RFD-04 | Refund reject | 15 days | Appeal grounds |
Response Protocol:
- Acknowledge: DRC-03 pre-deposit halts interest.
- Evidence Matrix: Ledger extracts, e-way PDFs, GSTR-2B screenshots.
- Reconciliation: Excel 2A/3B bridges; supplier confirmations.
- Legal Arguments: Cite CBIC clarifications (e.g., 171/03/2022 on ISD).
- Appeal: 3 months to Appellate Authority +25% deposit; AAAR.
Prevention Framework
- Tech Stack: ClearTax/Knack auto-recons; ABC supplier rating.
- Monthly SOPs: 2B ITC match by 13th; e-way generation SOP.
- Training: HSN masterlist, RCM directory updates.
- GSTR-9C Audit: >5cr turnover independent verification.
Case Study: Rs. 2cr ITC notice waived via 2B reconciliation proving supplier compliance. Proactive systems convert notices from threats to compliance enhancers.
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