There is a specific kind of dread (fear) that comes when you receive a GST notice. The letterhead, the section references and the language sound halfway between a query and an accusation.
Most business owners and finance teams after reading it, immediately assume the worst.
Most of the time, the problem is not as serious as you interpret the notice (or the notice itself makes it sound the way you perceive). A large proportion of GST notices that are issued today are not because of deliberate fraud or aggressive evasion – they are the result of data mismatches. The notice is just the flag (an indication).
What you do next will determine whether it ends there or snowballs into something much larger.
Let’s take a look at some of the common notices and how to respond/handle them:
The notice that most businesses get first: ASMT-10
The most common notice currently in circulation is the ASMT-10, issued under Section 61 of the CGST Act, 2017, read with Rule 99 of the CGST Rules. Technically a notice for scrutiny of returns – practically, it is the department’s way of saying:
“We’ve spotted something in your numbers. Can you explain it?”
| WHAT IT IS | RESPONSE REQUIRED | RESPONSE WINDOW |
|---|---|---|
| Scrutiny of returns notice (not a final demand) | ASMT-11, filed on the GST portal | 30 days – treat it as a hard deadline |
What happens if you ignore it
Businesses that ignore or panic or respond without adequate documentation end up receiving a DRC-01: A show cause notice. What was a simple query becomes a tax allegation with interest under Section 50 and potential penalties. An ASMT-10 is not a show-cause notice under Section 73 or 74. It has no immediate financial consequence on its own – until you make it one.
Why mismatches happen – and why the system does not acknowledge your reasons
The single most common trigger for GST notices is the mismatch between GSTR-3B and GSTR-2B. This is one area where even careful finance teams often get caught off guard.
| ELEMENT | WHAT IT IS | THE PROBLEM |
|---|---|---|
| GSTR-2B | Auto-generated ITC statement based on what your suppliers report in GSTR-1 / GSTR-1A. | If your supplier files late, that ITC does not appear in your GSTR-2B for that period – even if you have a valid invoice. |
| GSTR-3B | Your monthly self-declaration of tax paid and ITC claimed. | If your accounts team claims ITC based on the invoice in hand, the figures diverge from GSTR-2B – and the system flags the gap as an ineligible claim. |
| Rule 36(4) | Amended w.e.f. 1st Jan 2022: ITC can only be claimed to the extent it appears in GSTR-2B. | The system does not ask whether you paid the supplier. It asks whether the supplier reported it. These are two different questions. |
A note on litigation
This is a genuine commercial hardship and a number of high courts – including the Gujarat High Court and the Calcutta High Court – have been approached on this issue. But until legislative clarity emerges or a settled judicial position is established, the safest position is to treat your vendors’ filing compliance as part of your own ITC risk management.
What triggered notices in FY 2026-27: The 3 Pressure Points
Beyond the GSTR-2B mismatch, three other triggers are generating notices at volume right now. They are:
1. Reverse Charge Errors
Many mid-size businesses continue to under-report or miss obligations under Section 9(3) of the CGST Act – specific categories where the recipient, not the supplier, must pay GST.
Legal services from an advocate, sponsorship services, GTA freight – these are common examples. The department’s system cross-references reported outward supplies of your service providers against RCM declarations in your GSTR-3B Table 3.1(d). A gap shows up as a notice.
2. Stale or Unreconciled E-way Bills
Under Rule 138, every movement of goods above ₹50,000 must be covered by a valid e-way bill. The department now cross-references this data with GSTR-1 outward supply filings.
Where e-way bills were generated but the corresponding supply isn’t reflected in GSTR-1 – or where the values don’t match – notices follow. Particularly common in auto components, FMCG and pharmaceuticals.
3. ITC on Blocked Credits
Section 17(5) of the CGST Act explicitly blocks ITC on certain categories – club memberships, personal consumption, motor vehicles (with few exceptions), food and beverages in most circumstances. A company that avails GST on a meal invoice for client entertainment, or on vehicle insurance for a car, is sitting on an ITC exposure that the system will eventually surface.
Before you respond – is the notice even valid?
This is the most underused piece of advice in GST practice. Checking these details is not evasion – it’s applying the law correctly.
| CHECK 1: Officer Jurisdiction | CHECK 2: DIN Verification |
|---|---|
| Every GST officer has monetary jurisdiction limits. An Assistant Commissioner cannot issue a notice for demands that fall within the jurisdiction of a Joint Commissioner or above. Reference: Circular No. 31/05/2018-GST. If the officer doesn’t have jurisdiction over the quantum involved, the notice is procedurally defective. | The Document Identification Number (DIN) must mandatorily appear on all physical communications from the department per Circular No. 122/41/2019-GST. A notice without a DIN is not a valid notice in the eyes of the law. Several high courts have held that procedurally defective communications cannot initiate valid proceedings. |
The right way to respond – sequence matters as much as substance
When you receive a GST notice, the typical reaction is to get on with writing a reply. But practically the way you respond is equally important as the response itself. So before you work on the response, it will be helpful to take a moment to slow down and approach it systematically. Let’s take a look at how to respond:
1. Acknowledge within 48 hours
First thing you should do is to acknowledge the notice. Not just internal acknowledgement – communicate your position through the portal. Someone responsible in your finance team should have logged the response window, identified the specific discrepancy being questioned and begun pulling together the reconciliation. Delays in responding does not pause the clock. The department reads non-response as confirmation of the mismatch.
2. Gather targeted supporting documents
Next step is to collect the right supporting documents. It should be specific to the query type – for an ITC mismatch: purchase registers, GSTR-2B and a reconciliation. If the mismatch arose because your supplier filed late, then get a filing acknowledgement from them and include it. For an RCM notice, you have to attach internal ledgers showing RCM was self-assessed and paid separately.
3. File ASMT-11 with a clean, numbered reconciliation
Once the documents are ready, the response should be filed properly. Do not bury the explanation in prose. Show the numbers clearly – what you claimed, what appears in GSTR-2B, what the difference is and precisely why it exists. If the discrepancy arose from a timing issue and has since been corrected, say so explicitly with reference to the period in which the correction was made.
What Not To Do
Silence or a vague response is almost always what turns a query into a formal demand under Section 73 or 74. A well-structured response with coherent documentation closes most ASMT-10 matters at the scrutiny level without escalation.
The monthly habit that prevents most of this
Every GST professional who works in advisory or litigation has some version of the same conversation with clients:
“If you’d done this reconciliation in November, we wouldn’t be sitting here in March trying to explain it to an officer.”
So, let’s look at some of the monthly habits one should follow:
- Match GSTR-1, GSTR-3B and GSTR-2B monthly – and this should be done before filing, not after receiving a notice. Run this before the 11th and the 20th.
- Outward supplies in GSTR-1 must align with tax paid in GSTR-3B – always, every period.
- ITC claimed in GSTR-3B Table 4 must not exceed GSTR-2B. Any excess must either be deferred to the period when it appears or written off if the vendor is non-compliant.
- Monitor vendor compliance. A vendor with a consistent pattern of late GSTR-1 filing is effectively blocking your working capital. If you are claiming ITC on a ₹50 lakh invoice and the credit never shows up in GSTR-2B, you are absorbing the cash impact either way.
- Choose vendors partly based on their GST compliance history. This is a practice that the better-run finance teams have already quietly adopted.
The Bottom Line:
GST compliance today is not primarily about paying the correct tax – most reasonably well-run businesses are already doing that. It is about ensuring that your data tells a consistent story across every return, every period, every year.
The GST system matches GSTR-1 against GSTR-2A and GSTR-2B. It compares GSTR-3B with the liability that should emerge from GSTR-1. It cross-references e-way bill data with supply filings. At any point where the story breaks, a flag gets raised.
The businesses that face repeated notices, demand orders and litigation tend to share a common trait: they file first and reconcile later, if at all. The GSTN is integrating more data sources with every passing year – and getting better at surfacing exactly that approach.
A GST notice, at the end of it, is a data conversation. Answer it with data, answer it on time, and in most cases, it ends there. GST notices cannot be avoided in this era. But they can be resolved well – if reconciliations are maintained in compliance with law.
If you need professional help, please contact us.
Author Bio:
