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How to Reply to GST Show Cause Notice (SCN): Simple 12-Step Guide for Every Business

Published: December 6, 2025 | Kyna FinTax Associates | Delhi

Receiving a GST Show Cause Notice (SCN) doesn’t mean trouble—it’s your chance to clear discrepancies with facts and law. This simple 12-step guide helps business owners resolve 95% of SCNs without litigation or penalties.

1. Why Did You Get a GST SCN?

SCNs trigger for these common issues:

ITC Mismatch: GSTR-3B claims > GSTR-2A/2B available
Fake Invoice Claims: Supplier flagged non-existent
Excess Credit: Blocked/non-eligible ITC availed
Late/Non-Filing: Returns missed or delayed
Tax Short-Pay: Wrong rate applied or unpaid
E-way Mismatch: Bills don’t match transport docs

Action: Identify exact reason from SCN annexures.

2. Step 1: Read Notice Carefully (Day 1)

Check these 4 critical points:

Section 73 = Honest mistake (low penalty)
Section 74 = Fraud alleged (100% penalty risk)
Tax period + demand breakdown
30-day reply deadline

Pro Tip: Download all annexures—they show department’s actual evidence.

3. Step 2: Collect All Supporting Documents (Days 1-3)

Gather irrefutable proof:

✅ GSTR-1, 3B, 2A/2B reconciliation sheets

✅ Supplier invoices + e-way bills

✅ Payment proofs (bank statements)

✅ Stock registers + transport docs

✅ GST portal screenshots

Rule: Documents win cases. Arguments alone lose.

4. Step 3: Draft Professional Reply Structure

Use this proven format:

Section	Content
Introduction	“Received SCN dated [XX]. We maintain full compliance.”
Issue Summary	“Department alleges [exact SCN words].”
Your Response	Point-wise rebuttal with document references.
Legal Position	Relevant sections + case laws.
Prayer	“Request dropping proceedings + personal hearing.”

5. Step 4: Quote Powerful Legal Provisions

ITC Defence:

Sec 16(2): ITC eligibility conditions
Suncraft Energy (Calcutta HC): Can’t deny ITC without proving non-supply
D.Y. Beathel Enterprises (Madras HC): Burden of fake invoice proof on department Procedural:
Sec 75(5): No penalty without wilful misstatement

6. Step 5: Submit Reply on GST Portal

Exact navigation:
Services → User Services → View Additional Notices/Orders
→ Select SCN → “Reply” → Upload PDFs (<5MB each)
→ Submit → Download ARN Acknowledgment

Save ARN – Proof of submission.

7. Step 6: Always Request Personal Hearing

Mandatory line:

“We respectfully request a personal hearing under Section 75(4) before passing any order.”

Why? Protects appeal rights + shows good faith.

8. Step 7: Never Miss Deadlines

SCN Type	Reply Window	Penalty
Section 73 (Non-fraud)	30 days	10% or ₹10,000
Section 74 (Fraud)	30 days	100% of tax

Late reply = Ex-parte DRC-07 order = Immediate recovery.

9. Pro Tip: Use DRC-01A (Pre-SCN Stage)

Smart Move:

Pay voluntarily: Tax + 18% interest → Penalty waived
Dispute facts: Reply prevents full SCN
70% cases close here – Saves time + cost

10. If Final Order Passed (DRC-07)?

Immediate remedies:

✅ Appeal (DRC-06): 3 months + 1 month condonation

✅ Pre-deposit: 10% disputed tax (₹25 crore cap)

✅ File DRC-01 → DRC-06 for stay

✅ Rectification: DRC-08 (within 2 years)

11. SCN Reply Checklist

☑️ Identified exact issue + section ☑️ Collected all documents ☑️ Drafted structured reply ☑️ Added legal precedents ☑️ Submitted online + ARN saved ☑️ Requested personal hearing ☑️ Set follow-up calendar

12. Golden Rules from 500+ Resolutions

Never ignore – Even ₹10,000 demands escalate
Facts first – Documents > Emotions
Professional tone – Anger loses cases
Act early – DRC-01A saves 70% effort
Track everything – Portal delays common

Kyna FinTax SCN Success Stats

95% resolution rate without appeal
Fixed fee packages (Delhi/Rajasthan focus)
Free initial SCN analysis

Contact Us

Kyna FinTax Associates
WZ-1390/Z2, 3rd Floor, Nangal Raya Extension, South West Delhi – 110046
WhatsApp/Call: +91 74210 82222
Email: services@kynafintax.com
Website: https://kynafintax.com

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Disclaimer: Professional advice recommended for case-specific strategy.