Delhi, India · tax

How to Reply to GST Show Cause Notice DRC-01 in Delhi

Receiving Form GST DRC-01 from the Delhi Goods and Services Tax department or Central GST Commissionerate triggers a strict statutory deadline under indirect tax law. If left unanswered, tax authorities can confirm tax demands unilaterally, levy heavy penalties, and initiate coercive bank attachment proceedings under Form DRC-07. You have clear statutory protections under the CGST and Delhi GST Acts to contest unsubstantiated claims, demand a personal hearing, and submit a point-by-point reply in Form GST DRC-06.

What the Law Says: Statutory Framework in Delhi

In Delhi, Show Cause Notices under indirect tax are governed by the Central Goods and Services Tax (CGST) Act, 2017 and the Delhi Goods and Services Tax (DGST) Act, 2017. Form GST DRC-01 is an electronic summary of the substantive Show Cause Notice (SCN) issued under Rule 142(1) of the CGST/DGST Rules. Tax officers invoke Section 73 for non-fraud discrepancies, Section 74 for allegations involving fraud, wilful misstatement, or suppression of facts, or Section 74A for disputes pertaining to Financial Year 2024-25 onwards.

A critical legal protection for Delhi taxpayers is Section 75(4) of the CGST and DGST Acts, which mandates that the proper officer must grant an opportunity of a personal hearing before passing any adverse order or whenever a taxpayer requests one in writing. The Delhi High Court has repeatedly held that an adjudication order passed without a meaningful personal hearing violates natural justice and is liable to be set aside. Furthermore, under Section 75(7), the final demand order cannot exceed the amount specified in the DRC-01 nor rely on new grounds not raised in the original notice.

The department cannot merely rely on automated system mismatches (such as GSTR-3B versus GSTR-2A/2B) without establishing the factual basis. Under CBIC directives applicable in Delhi, every valid notice must also contain a verifiable Document Identification Number (DIN) and specify the precise grounds on which tax, interest under Section 50, and penalties are proposed.

Substantive Grounds and Procedural Defenses to Raise

When an officer issues DRC-01, the burden of proving that tax was short-paid or credit was wrongly availed falls on the revenue, while the burden of demonstrating entitlement to Input Tax Credit (ITC) rests on the taxpayer under Section 155 of the Act. For ITC denials where a supplier allegedly failed to deposit tax or defaulted on filing, Delhi taxpayers can establish compliance under Section 16(2) by placing genuine tax invoices, proof of banking payments, delivery challans, and e-way bills on record.

Examine whether the officer improperly invoked the extended limitation period under Section 74. Tax authorities frequently allege 'suppression of facts' merely to avoid the standard limitation bar under Section 73. Under Section 75(2), if the department fails to establish wilful fraud or misstatement, the notice must be treated as a routine Section 73 notice, neutralizing severe fraud penalties. Additionally, if the officer merely uploaded a summary table without a detailed, speaking show cause notice containing underlying reasons, you must preserve this defect as a threshold jurisdictional objection in your rebuttal.

Drafting and Submitting Your DRC-06 Rebuttal

Your formal response must be submitted online in Form GST DRC-06 within the time limit stipulated in the notice (typically 30 days). The reply should be drafted as a structured legal pleading: beginning with preliminary objections (such as limitation, jurisdiction, and procedural defects), followed by an arithmetical reconciliation table that counters the officer's figures line-by-line, and concluding with a clear prayer requesting the dropping of proceedings.

Always conclude your DRC-06 submission with an explicit written request for a personal hearing under Section 75(4) of the CGST/DGST Act, even if you select 'Yes' in the portal's radio buttons. If you require additional time to reconcile records or collect supplier certificates, file an interim reply in Form DRC-06 specifically seeking an extension under Section 75(5).

Navigating aggressive GST notices requires accurate documentation and strategic legal analysis. You can use Caunsel to research relevant case law, securely organize and store your reconciliation documents within a case workspace, or connect with an independent indirect tax lawyer in Delhi for legal advice. Caunsel is an enabling legal technology platform, not a law firm, and does not file responses or represent taxpayers before the GST department.

Steps

• Log into the GST Portal, navigate to Services > User Services > View Additional Notices and Orders, and download both Form GST DRC-01 and the detailed substantive Show Cause Notice attachment.
• Verify the statutory details, including the Document Identification Number (DIN), the section invoked (73, 74, or 74A), and the 30-day response limitation date.
• Prepare a comprehensive reconciliation sheet addressing every discrepancy raised by the officer (such as turnover variance, ITC GSTR-2B mismatches, or reverse charge calculations) supported by indexed tax invoices and bank statements.
• Draft your formal reply incorporating preliminary jurisdictional objections, factual rebuttals, supporting statutory citations, and an express prayer for a personal hearing under Section 75(4).
• Submit your response electronically via Form GST DRC-06 under the 'Replies' tab on the GST portal, upload your annexures as PDF files, and retain the generated Application Reference Number (ARN) for your records.

Common mistakes

• Ignoring the notice or delaying action until the 30-day window expires, allowing the officer to pass an enforceable summary demand order under Form DRC-07 ex-parte.
• Failing to expressly request a personal hearing under Section 75(4) in the text of Form DRC-06, which compromises your natural justice defenses before appellate forums.
• Uploading raw accounting spreadsheets without an indexed narrative explanation or proof of payment under Section 16(2) of the CGST/DGST Act.
• Accepting an allegation of fraud or suppression under Section 74 when the underlying issue is an honest clerical variance or an interpretive tax position.

Questions people ask

What is the time limit to file a reply to DRC-01 in Delhi?

A taxpayer is typically given 30 days from the date of service of Form GST DRC-01 to file a reply in Form GST DRC-06. If you need additional time to reconcile accounts, you must submit a written adjournment application via DRC-06 before the deadline expires, citing valid reasons under Section 75(5).

Can the GST officer issue a final demand without granting a personal hearing?

No. Under Section 75(4) of the CGST and Delhi GST Acts, an officer is legally mandated to grant a personal hearing if an adverse decision is contemplated or if the taxpayer requests one in writing. The Delhi High Court routinely sets aside adverse adjudication orders where this statutory right is denied.

What should I do if I agree with part of the demand in DRC-01?

If you accept a portion of the tax demand, you can pay the admitted tax and applicable interest using Form GST DRC-03. You should then mention this partial payment in your Form GST DRC-06 reply while providing a full factual and legal rebuttal against the disputed balance.

General information only, last updated 2026-10-15. Caunsel is not a law firm and does not practise law. AI answers and this guide are not legal advice. Verify filings, deadlines, and statutes with a licensed lawyer in Delhi, India.