GST Notices: ASMT-10, DRC-01 and DRC-03 — How to Reply Correctly
- A GST notice is not a demand — replying correctly within the deadline with the right form (ASMT-11, DRC-06, or DRC-03) can close the matter without paying a rupee extra.
- ASMT-10 is a scrutiny notice, DRC-01 is a show-cause notice for demand, and DRC-03 is a voluntary payment form — confusing them is the single most expensive mistake small businesses make.
- Always attach supporting documents and reconcile your GSTR-1, GSTR-3B, and GSTR-2B figures before replying — a mismatched reply invites a fresh notice.
If a GST notice has landed in your inbox, the worst thing you can do is ignore it or panic-pay whatever the officer asks. Most GST notices — especially ASMT-10 and DRC-01 — are information-seeking exercises, not final demands. Reply correctly, on time, with the right form and supporting documents, and the vast majority are closed without any additional tax liability. This guide explains exactly what each notice means, what reply form to use, and how to get the arithmetic right — in plain English, no jargon.
What Each Notice Actually Means
The GST portal generates dozens of notice types, but three dominate small-business inboxes:
| Notice / Form | Who sends it | What it means | Reply form | Typical time limit to reply |
|---|---|---|---|---|
| ASMT-10 | Proper officer (scrutiny) | Officer has spotted a discrepancy in your returns and wants an explanation | ASMT-11 | 30 days from date of service (may be extended on request) |
| DRC-01 | Proper officer (adjudication) | Formal show-cause notice — officer believes tax is short-paid or ITC is wrongly claimed | DRC-06 | Specified in the notice (usually 30 days; Section 73/74 timelines apply) |
| DRC-03 | You (taxpayer-initiated) | Voluntary payment of tax, interest, or penalty before or during proceedings | DRC-03 itself | Anytime — but timing affects penalty concession |
The critical point: ASMT-10 is not a demand. It is a scrutiny notice under Section 61 of the CGST Act. You are not required to pay anything when you receive it — you are required to explain the discrepancy.
ASMT-10: How to Read It and What to Do
The officer compares your GSTR-1 (outward supply details), GSTR-3B (net tax payment), and GSTR-2B (auto-drafted ITC). Any mismatch triggers ASMT-10. Common triggers include:
- GSTR-1 turnover higher than GSTR-3B turnover (suggests under-reporting of tax)
- ITC claimed in GSTR-3B higher than what appears in GSTR-2B
- Exempt or nil-rated supplies shown inconsistently across returns
- Reverse charge liability not paid
Your reply goes in Form ASMT-11 on the GST portal. Attach reconciliation workings, amended return acknowledgements, or supplier invoices — whatever explains the gap. If the officer accepts your reply, they issue ASMT-12 (acceptance order) and the matter is closed. If they are not satisfied, proceedings can escalate to DRC-01.
DRC-01: The Show-Cause Notice You Must Take Seriously
DRC-01 is issued under Section 73 (no fraud) or Section 74 (fraud/suppression) of the CGST Act. The difference matters enormously for penalty:
- Section 73 (no fraud): Penalty can be nil if you pay before SCN is issued, or 10% of tax (minimum ₹10,000) if paid after SCN but before order.
- Section 74 (fraud): Penalty is 15% of tax if paid before SCN, 25% if paid after SCN but before order, 50% if paid after order. These are the statutory minimums — the officer can go higher.
Your reply to DRC-01 is Form DRC-06, filed on the portal. In DRC-06 you can: (a) accept the liability wholly and pay using DRC-03; (b) accept partial liability and dispute the rest; or (c) contest the entire demand with legal submissions and evidence.
Do not file DRC-03 alone and assume the matter is closed. DRC-03 is a payment form. Unless you also file DRC-06 referencing that payment, the officer may still pass an ex-parte order.
Worked Example: ASMT-10 on a ₹48,00,000 Turnover Business
Ravi runs a trading business in Delhi. His GSTR-1 for FY 2025-26 shows taxable outward supplies of ₹48,00,000 at 18% GST — implying output tax of ₹8,64,000. But his GSTR-3B shows output tax paid of only ₹7,92,000. The gap is ₹72,000.
An ASMT-10 arrives asking him to explain the ₹72,000 difference.
Ravi checks his records and finds two invoices totalling ₹4,00,000 that he had reported in GSTR-1 for Q4 but then amended in the next period because one customer returned goods and another invoice was raised in error. The amended GSTR-1 reduced his taxable value by ₹4,00,000, reducing output tax by ₹72,000 (₹4,00,000 × 18%). He had correctly paid the lower amount in GSTR-3B.
In his ASMT-11 reply, Ravi attaches: (1) the original and amended GSTR-1 data, (2) the credit note issued to the customer, and (3) a one-page reconciliation showing the maths. The officer issues ASMT-12 accepting the explanation. Additional tax paid: ₹0.
The lesson: a ₹72,000 notice closed with paperwork, not payment.
DRC-03: When and How to Use It Correctly
DRC-03 is your friend — but only when used in the right context:
- Voluntary payment before notice: If you discover an error yourself, file DRC-03 to pay the shortfall. Under Section 73, this attracts no penalty (only interest).
- Payment during ASMT-10 proceedings: If your ASMT-11 reply partly accepts liability, pay the admitted amount via DRC-03 and reference the ARN in your ASMT-11.
- Payment after DRC-01: File DRC-06 first to respond to the SCN, then use DRC-03 for the payment. Mention the DRC-03 ARN inside your DRC-06 submission.
Interest is calculated at 18% per annum on short-paid tax from the due date of the return to the date of payment. For Ravi's hypothetical ₹72,000 shortfall paid 12 months late, interest would be ₹72,000 × 18% × (365/365) = ₹12,960. Catching errors early saves real money.
Not sure which notice type you have received or what it is asking? Upload it to KyaTax's Notice Decoder and get a plain-English summary in seconds.
Common Mistakes When Replying to GST Notices
- Mistake 1 — Missing the deadline: If you miss the ASMT-11 or DRC-06 deadline, the officer can pass an ex-parte best-judgment assessment or demand order. Always reply, even if just to request an extension.
- Mistake 2 — Paying via DRC-03 without filing DRC-06: Payment does not substitute for a formal reply. The adjudicating officer may not see your DRC-03 automatically and will pass an adverse order.
- Mistake 3 — Uploading blurry or incomplete documents: Officers reject or ignore attachments they cannot read. Always upload clear, ledger-referenced PDFs. Name files logically (e.g., "Credit_Note_INV-045_March25.pdf").
- Mistake 4 — Accepting liability for the full amount without checking: Officers often compute the maximum possible demand. Cross-check every line item. Claiming valid ITC that has been wrongly disallowed in the notice is your legal right.
- Mistake 5 — Ignoring a Section 74 notice thinking it is routine: A Section 74 notice alleges fraud or wilful misstatement. The penalty provisions are far harsher and the limitation period for the department is longer. Get professional help immediately.
Step-by-Step Reply Checklist
- Read the notice carefully — identify the form number (ASMT-10 or DRC-01), the section invoked, and the exact discrepancy amount.
- Pull your GSTR-1, GSTR-3B, and GSTR-2B data for the period and reconcile to identify the root cause.
- Decide your position: full acceptance, partial acceptance, or full contest.
- If paying any amount, file DRC-03 first and note the ARN (acknowledgement reference number).
- Draft your reply (ASMT-11 or DRC-06) on the portal. State facts clearly, reference documents by name, and include the DRC-03 ARN if applicable.
- Attach all supporting documents: invoices, credit notes, ledger extracts, reconciliation sheets.
- Submit and download the acknowledgement. Set a diary reminder for the officer's response deadline.
Do it yourself in minutes — free to try, no login needed.
Open Notice Decoder →Frequently asked questions
What happens if I do not reply to an ASMT-10 notice?
If you ignore ASMT-10, the proper officer can initiate assessment proceedings under Section 63 of the CGST Act and pass a best-judgment assessment order, which typically assumes the worst-case tax liability. You then lose the chance to explain the discrepancy cheaply. Always reply, even if only to say you need more time.
Can I reply to a DRC-01 notice myself or do I need a CA?
For straightforward factual discrepancies — like an amended invoice or a timing difference — many business owners reply themselves using DRC-06. However, if the notice invokes Section 74 (fraud), involves large amounts, or cites complex ITC reversal rules, hire a GST practitioner. An incorrect reply can worsen your position.
Does filing DRC-03 voluntarily stop interest from accumulating?
Yes. Interest under Section 50 of the CGST Act stops accruing on the date you make payment through DRC-03. So paying even a partially admitted liability quickly reduces your total interest cost at 18% per annum.
How do I know if my GST notice was correctly served and is legally valid?
A valid GST notice must be uploaded on the GST portal under your login (Services > User Services > View Notices). It should carry the officer's digital signature or a system-generated reference number. If you receive a notice only via WhatsApp or email without a portal entry, verify authenticity before responding — fraudulent notices do exist.
General information for FY 2026-27, not professional advice for your specific case. Rules change — verify against the latest notification or ask a KyaTax expert.
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