Answer

1. F

   Facts

   A Show Cause Notice is the GST department's opening move in any demand action. Every SCN demands a written response explaining why the proposed tax demand should not be confirmed. Non-response = ex-parte order. Average demand confirmed: 90% when taxpayer does not respond. Average demand when CA responds with evidence: 40-60% reduction.

2. P

   Provisions and law

   • Sec 73
   • Sec 74
   • Sec 75(6)
   • Sec 75(4)
3. A

   Analysis

   Most common SCN triggers: (1) ITC mismatch, GSTR-2A shows less than what you claimed in GSTR-3B. (2) GSTR-1 vs GSTR-3B mismatch, different outward supply totals. (3) Turnover mismatch, GSTR-9 vs GSTR-3B. (4) Excess ITC claimed including blocked credits. (5) Tax on advances received but not declared. (6) Place of supply incorrectly determined (IGST vs CGST+SGST applied wrong). Section 73 vs Section 74: If department alleges fraud, misstatement, or suppression → Section 74 notice (100% penalty). For normal differences without fraud allegation → Section 73 (10% penalty). In practice, many notices are wrongly issued under Section 74. If your CA can establish the discrepancy was not fraudulent → converted to Section 73, penalty drops from 100% to 10%.

4. C

   Conclusion

   1. 1Read SCN completely, identify: which section (73 or 74), which FY, which specific issue
   2. 2Note the response deadline on the SCN, never miss it, no automatic extension
   3. 3Calendar the personal hearing date if mentioned, request if not mentioned
   4. 4Identify the root cause: ITC mismatch? GSTR-1/3B mismatch? Wrong tax rate? Blocked credit?
   5. 5Pull relevant records: purchase invoices, GSTR-2B, GSTR-1/3B for the disputed period, payment receipts
   6. 6If the demand is partially correct: prepare DRC-03 for the agreed amount + interest (24% p.a.)

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.