Rule 142 of the CGST Rules, deals with the issuance of notices and orders for the demand of tax, interest, and penalties under the GST law. It lays down the process for communication of such notices to the taxpayer.

Rule 142(1)(a)

The proper officer shall serve, along with the notice issued

(i) u/s 52 [ECO liable to collect TCS] or

(ii) u/s 73 or 74 or 74A or 76 [Determination of tax not paid or short paid or erroneously refunded or IT wrongly availed or utilised] or

(iii) u/s 122 or 123 or section 124 or 125 or 127 or 129 or 130, [Penalty for certain offences]

a summary thereof in GST DRC-01, specifying therein the details of the amount payable.

PO shall issue demand notices under various sections along with DRC-01.

Rule 142(1)(b)

The proper officer shall serve, along with the statement issued

u/s 73(3) or 74(3) or 74A(3),

a summary thereof in GST DRC-02, specifying therein the details of the amount payable.

If the tax officer finds same discrepancies over multiple tax periods, a statement in GST DRC-02 is issued

Example

ABC Enterprises claimed excessive ITC for 2 years. Instead of issuing 2 separate notices, the tax officer consolidates the demand using GST DRC-02.

[i][Rule 142(3)

Where

(i) the person chargeable with tax makes payment of

(a) tax and interest u/s 73(8) or 74A(8)(ii) or

(b) tax, interest and penalty u/s 74(8) or 74A,(9)(ii)

within the period specified therein, or

(ii) the person concerned makes payment of the amount referred to section 129(1) within 7 days of the notice issued u/s 129(3) but before the issuance of order u/s 129(3),

he shall intimate the proper officer of such payment in GST DRC-03

Rule 142(3)

he shall intimate the proper officer of such payment in GST DRC-03 and

the proper officer shall issue an intimation in GST DRC-05 concluding the proceedings in respect of the said notice.

Rule 142(4)

The representation referred to in section 73(9) or 74(9) or 74A(6) or 76(3) or

the reply to any notice issued under any section whose summary has been uploaded in GST DRC-01 u/sr (1)

shall be furnished in FORM GST DRC-06.

The taxpayer can submit their response or objections to the notice Form GST DRC-06.

Supporting documents and justifications must be provided for review.

The tax officer may accept the response and drop the proceedings or reject it and proceed with issuing a demand order.

Rule 142(5)

A summary of the order issued

(i) u/s 52 [ECO liable to collect TCS] or

(ii) u/s 62 or 63 or 64 or

(ii) u/s 73 or 74 or 74A or 75 or 76 [Determination of tax not paid or short paid or erroneously refunded or IT wrongly availed or utilised] or

(iii) u/s 122 or 123 or section 124 or 125 or 127 or 129 or 130, [Penalty for certain offences]

shall be uploaded in GST DRC-07, specifying therein the amount of ^[1][tax, interest and penalty, payable by the person concerned]

If the taxpayer does not respond or disputes the notice unsuccessfully, the officer issues a final demand order in GST DRC-07.

This form includes the final payable amount, including tax, interest, and penalties.

Rule 142(6)

The order referred to in sub-rule (5) shall be treated as the notice for recovery

Rule 142(7)

Where a rectification of the order has been passed u/s 161 or where an order uploaded on the system has been withdrawn,

a summary of the rectification order or of the withdrawal order

shall be uploaded by the proper officer in GST DRC-08.]

Rule 142(1A)

Before the service of notice u/s 73(1) or 74(1) or 74A(1)

the [2][proper officer may],

communicate the details of any tax, interest and penalty as ascertained by him,

in Part A of GST DRC-01A

Significance of DRC-01A

(i) Encourages voluntary compliance.

(ii) Provides an early opportunity to resolve discrepancies.

Example:

The GST officer, upon analyzing XYZ Ltd.'s returns, finds a potential discrepancy in ITC.

Before issuing a formal notice, they send a DRC-01A to XYZ Ltd., detailing the discrepancy and the potential liability. XYZ Ltd. can then pay the dues or provide supporting documents.

^[3][Rule 142(2A)

Where the person referred to in sub-rule (1A)

has made partial payment of the amount communicated to him or

desires to file any submissions against the proposed liability,

he may make such submission in Part B of GST DRC-01A [4][, and

thereafter the proper officer may issue an intimation in Part-C of GST DRC-01A, accepting the payment or the submissions or both made by the said person.]]

Rule 142(2)

Where, before the service of notice or statement,

(i) person chargeable with tax makes payment of the

tax and interest in accordance with the section 73(5) or 74A(8)(i), or

tax, interest and penalty in accordance with section 74(5) or 74A](9)(i), or

(ii) where any person makes payment of tax, interest, penalty or any other amount due in accordance with the provisions of the Act

^[5][whether on his own ascertainment or, as communicated by the proper officer u/sr (1A)]

[6][he shall inform the PO of such payment in GST DRC-03

and an acknowledgement, in GST DRC–04 shall be made available to the person]

[7][Rule 142(2B)

Where tax, interest, penalty or any other amount payable by a person

(i) u/s 52 [ECO liable to collect TCS] or

(ii) u/s 73 or 74 or 74A or 76 [Determination of tax not paid or short paid or erroneously refunded or IT wrongly availed or utilised] or

(iii) u/s 122 or 123 or section 124 or 125 or 127 or 129 or 130, [Penalty for certain offences]

has been paid by the said person through an intimation in GST DRC-03 u/sr (2),

instead of crediting the said amount in the e-liability register in GST PMT–01 against the debit entry created for the said demand,

the said person may file an application in GST DRC-03A, and the amount so paid and intimated through GST DRC-03 shall be credited in E-Liability Register in GST PMT–01 against the debit entry created for the said demand, as if the said payment was made towards the said demand on the date of such intimation made through GST DRC-03.