SCN: Show Cause Notice Under GST

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.

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%.