GST: DRC 01 Vs DRC 01A

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Below is a comprehensive, step-by-step guide comparing FORM GST DRC-01 and FORM GST DRC-01A, including their roles in GST compliance, procedural details, and how taxpayers should handle them, drawing on relevant provisions from the Central Goods and Services Tax (CGST) Act, 2017 and CGST Rules, 2017.

DRC 01:-

Purpose: A Show Cause Notice (SCN) issued by GST officers to formally demand tax, interest, and/or penalties when discrepancies are identified in tax payment, input tax credit (ITC), or other GST compliance issues.

Legal Basis: Issued under Sections 52, 73, 74, 76, 122–125, 127, 129, or 130 of the CGST Act, as per Rule 142(1) of the CGST Rules, 2017.

Nature: A formal notice requiring taxpayers to either pay the demanded amount or contest the allegations within a specified period (typically 7 days to avoid restrictions like GSTR-1 blocking, and 30 days for payment or detailed reply).

Key Features:

• Contains a summary of the demand (tax, interest, penalty).

• Cites the specific section of the CGST Act (e.g., Section 73 for non-fraud, Section 74 for fraud).

• Requires a reply in FORM GST DRC-06 if contested, or payment via FORM GST DRC-03 if accepted.

• Failure to respond may lead to GSTR-1 blocking, final demand in FORM GST DRC-07, or recovery proceedings.

DRC - 01A:

Purpose: An intimation issued before a formal SCN (DRC-01) to inform taxpayers of a tax liability or discrepancy, giving them an opportunity to

voluntarily pay the dues or respond without escalating to a formal notice.

Legal Basis: Issued under Rule 142(1A) of the CGST Rules, 2017, introduced via Notification No. 49/2019-Central Tax dated 09-10-2019, to ensure taxpayers are informed prior to SCN issuance.

Nature: A preliminary notice, not a formal SCN, aimed at encouraging voluntary compliance. It is mandatory before issuing DRC-01 in most cases (except under specific sections like 122–125, 127, 129, or 130).

Key Features:

• Divided into Part A (intimation by the officer) and Part B (taxpayer’s response).

• Allows taxpayers to pay the tax, interest, and/or penalty voluntarily via FORM GST DRC-03.

• Requires a response in Part B to confirm payment or explain why the demand is incorrect.

• If the taxpayer complies, no further SCN (DRC-01) is issued; otherwise, DRC-01 follows

Key Differences

Aspect	FORM GST DRC-01	FORM GST DRC-01A
Purpose	Formal Show Cause Notice for demand.	Preliminary intimation to encourage voluntary compliance.
Legal Provision	Rule 142(1), CGST Rules, 2017.	Rule 142(1A), CGST Rules, 2017.
Stage	Issued after DRC-01A (if applicable) or directly for certain sections.	Issued before DRC-01 (mandatory in most cases).
Nature	Mandatory response required; escalates to demand.	Voluntary compliance encouraged; non-binding.
Response Time	7 days (to avoid GSTR-1 block); 30 days for payment/reply.	No fixed timeline, but prompt response recommended.
Response Form	DRC-06 (reply) or DRC-03 (payment).	Part B of DRC-01A or DRC-03 (payment).
Consequences of Non-Response	GSTR-1 block, DRC-07 order, recovery proceedings.	Escalates to DRC-01 (formal SCN).
Sections Covered	52, 73, 74, 76, 122–125, 127, 129, 130.	Primarily 73, 74 (may apply to others except 122–125, 127, 129, 130).
Format	Detailed notice with demand summary.	Two parts: Part A (officer’s intimation), Part B (taxpayer’s reply).