Library / Goods and Services Tax: The Professional's Master Guide

44. Handling Notices and Managing Litigation

A notice is a deadline with a document attached. The first job is to find out what stage the matter is at and how much time is left. The second is to decide whether to settle or contest. Only then does drafting start.

44.1 Triage: What the Form Tells You

Form	Stage	Usual time to respond
ASMT-10	Scrutiny of returns	30 days
ADT-01, ADT-02	Audit notice, audit findings	15 working days notice; as per findings
DRC-01A	Pre-notice intimation	As stated, usually 7 to 30 days
DRC-01B, DRC-01C	System mismatch in liability or ITC	7 days
DRC-01	Show cause notice	30 days, or as stated
DRC-07	Order	Pay in 3 months or appeal in 3 months
DRC-13	Garnishee notice	Immediate
REG-17, REG-31	Cancellation or suspension of registration	REG-17: 7 days; REG-31: 30 days

Check the DIN on every CBIC communication and verify it on the CBIC site. Check the officer's jurisdiction, the period, and whether the other administration has already issued a notice on the same issue.

Illustration 205: A limitation diary for a section 74A notice

Joshi Electricals received a section 74A notice (non-fraud) for FY 2024-25 dated 14 August 2026, proposing tax of Rs. 7,20,000 on an ITC mismatch.

Step 1: Reply due in 30 days: 13 September 2026.

Step 2: The 60-day window for payment with interest and no penalty ends on 13 October 2026.

Step 3: The order is due within 12 months of the notice, by 14 August 2027 (up to 14 February 2028 if extended).

Step 4: If an order is passed on 10 March 2027, first appeal lies by 10 June 2027.

44.2 Settle or Contest

The decision depends on the strength of the case, the cost of delay and the penalty scale. Interest keeps running while a matter is contested unless the amount is paid under protest.

Illustration 206: Paying within 60 days versus contesting

Continuing the Joshi Electricals case, interest to date is Rs. 1,40,000.

Option A: pay tax Rs. 7,20,000 and interest Rs. 1,40,000 within 60 days. Total Rs. 8,60,000; no penalty.

Option B: contest and lose at first appeal two years later. Extra interest Rs. 7,20,000 x 18% x 2 = Rs. 2,59,200, so interest Rs. 3,99,200; penalty 10% Rs. 72,000; total outflow Rs. 11,91,200, less the pre-deposit already paid, plus professional fees.

Option C: pay under protest now and contest. Interest stops; the amount is refunded with interest if the appeal succeeds.

If the documents show the supplier paid the tax, the case is strong and B or C is sensible. If the supplier is non-existent, A is usually better.

44.3 Reply Structure and Hearing

A reply should be complete and courteous. It is read by an officer with many files, and later by an appellate authority deciding whether the officer considered it.

Preliminary objections: limitation, jurisdiction, DIN, section 6(2)(b), vague allegations, extended period not invoked properly.
Facts: a short, accurate chronology.
Point-wise reply: each allegation, with the reconciliation and documents.
Law: sections, rules, circulars and judgments, with the passage relied upon.
Interest and penalty: separate submissions, since they often survive even when tax is conceded.
Prayer and request for hearing.

A specimen outline of a reply to a notice alleging excess ITC over GSTR-2B follows: (1) the ITC in question, invoice-wise, with GSTR-2B references for the month or later month; (2) IGST on imports and RCM credits that do not appear in the B2B part of GSTR-2B; (3) supplier invoices uploaded late, with proof that the credit was not used before appearing in GSTR-2B; (4) proof of receipt and payment for any invoice still missing, with a request to proceed first against the supplier and to allow restoration on the supplier's payment; (5) interest only on credit utilised, under section 50(3) and rule 88B.

Practice note

For the personal hearing, carry a two-page note of arguments, the reconciliation and an indexed paper book. Ask that the submissions be recorded, and file a written synopsis the same day.

Do not concede orally what has not been conceded in writing.

44.4 Strategy, Tracking and Ethics

Choose a writ only where the order is without jurisdiction, a hearing was denied, limitation has plainly expired or a rule is invalid. Otherwise appeal, because the appellate forums examine facts. Payment through DRC-03 with a clear note that it is under protest preserves the right to refund.

Field	Content
Client and GSTIN	Entity, State, jurisdiction (Centre or State)
Reference	Notice or order number, DIN, date of service
Period and issue	Financial year, section, subject
Amounts	Tax, interest, penalty; amount paid or pre-deposited
Deadlines	Reply, hearing, 60-day window, order limit, appeal limit
Status and next action	Owner and due date

Tell the client in writing what the notice says, the options, the likely cost of each and the deadline. Never advise a client to withhold or alter documents. Where facts show deliberate evasion, advise the client of the consequences and do not present a false case. Keep proper files, since the professional's own conduct may be examined later.

Chapter summary

• The form number identifies the stage; diarise every deadline on the day of receipt and check the DIN.

• Decide whether to settle or contest by comparing the penalty-free window with the cost of delay and the strength of evidence.

• Replies should start with preliminary objections, then facts, point-wise answers and law, with separate submissions on interest and penalty.

• Use a writ only for jurisdiction, natural justice, limitation or vires; otherwise appeal.

• A litigation tracker and written client advice protect both the client and the professional.

PART J: COMPREHENSIVE CASE STUDIES

Fifteen working files, from the monthly return to the show cause notice

The earlier Parts explain the law topic by topic. In practice a client brings all of it together in one set of facts, one month or one transaction. The case studies in this Part are built the way a working paper is built: facts with numbers, the issues, the computation with every step shown, the forms and due dates, and the lessons that carry to the next file.