Before a Notice: DRC-01A and Paying Voluntarily

The cheapest point to settle a GST demand is before the show cause notice. The law fixes the price. Where there is no fraud, tax and interest are payable with no penalty at all. Where there is fraud or suppression, the penalty is fifteen per cent. Once a notice issues, and again once an order is passed, the price rises. The difficulty is that this stage is the least formal. There may be an intimation in FORM GST DRC-01A, or there may be nothing at all before the notice arrives. A payment made at this stage also has to be recorded in a way that the portal, and later the officer, can match to the case.

This guide covers the DRC-01A intimation under rule 142(1A), payment through DRC-03 and its acknowledgement in DRC-04, and the newer DRC-03A for linking a payment to a demand. The law on the three demand sections is in the series guide Notices and Demands: DRC-01A, DRC-01, and Sections 73, 74 and 74A. This guide adds the procedure.

What the Act allows before a notice

Each demand section lets the person pay before a notice is served, “on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer”, and “inform the proper officer in writing of such payment”:

Provision	Years	Case	Pay before notice	Effect
73(5), (6)	Up to 2023-24	No fraud	Tax and interest	No notice “in respect of the tax so paid or any penalty”
74(5), (6)	Up to 2023-24	Fraud, wilful misstatement or suppression	Tax, interest and penalty of 15 per cent of the tax	No notice in respect of the tax so paid “or any penalty”
74A(8)(i)	2024-25 on	No fraud	Tax and interest	No notice “in respect of the tax so paid or any penalty”
74A(9)(i)	2024-25 on	Fraud, wilful misstatement or suppression	Tax, interest and penalty of 15 per cent of the tax	No notice in respect of the tax so paid “or any penalty”

Three qualifications apply.

• A short payment reopens the matter. Under sections 73(7), 74(7) and 74A(10), where the officer thinks the amount paid “falls short of the amount actually payable”, he “shall proceed to issue the notice” for the shortfall.
• No relief for unpaid self-assessed or collected tax. Sections 73(11) and 74A(11) make the ten per cent penalty payable despite early payment. This applies “where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax”.
• Prosecution is outside it. Explanation 1(i) to section 74, and the matching Explanation to section 74A, exclude proceedings under section 132 from “all proceedings in respect of the said notice”. A payment closes the demand, not a prosecution.

Interest is under section 50. Section 49 allows the electronic credit ledger to be used only “towards output tax”. Interest and penalty therefore come from the cash ledger.

The DRC-01A intimation

Rule 142(1A), as it now reads, provides:

The proper officer may, before service of Notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74 or sub-section (1) of section 74A, as the case may be, communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A.

Its history. Notification No. 49/2019-Central Tax inserted the sub-rule from 9 October 2019, with “The proper officer shall … communicate”. Notification No. 79/2020-Central Tax, of 15 October 2020, substituted “may”. Notification No. 12/2024-Central Tax, of 10 July 2024, substituted the form and added Part C. Notification No. 20/2024-Central Tax added section 74A from 1 November 2024. For officers of central tax, CBIC assigned the function under rule 142(1A) to Superintendents, Deputy and Assistant Commissioners, and Additional and Joint Commissioners only on 27 October 2025, in Circular No. 254/11/2025-GST.

Part A is the officer’s intimation. It sets out tax, interest and penalty by Act and period, with “the grounds and quantification”. It names a date for payment, “failing which Show Cause Notice will be issued”, and the section under which the notice would issue. It also names a date for submissions in Part B.

Part B is the person’s reply under rule 142(2A). It takes one of two forms:

• A. “the said liability is discharged partially/ fully to the extent of Rs … through …” with submissions on the rest; or
• B. “the said liability is not acceptable”, with submissions.

Part C is the officer’s acceptance. Since Notification 12/2024, rule 142(2A) provides that “the proper officer may issue an intimation in Part-C of FORM GST DRC-01A, accepting the payment or the submissions or both”. Part C records that the payment, the reply, or both, “has been found satisfactory and hence accepted”. The rule says “may”. It does not require the officer to issue Part C, or to state reasons for not doing so.

Is DRC-01A mandatory?

Since 15 October 2020, the rule has said “may”, and courts have treated an intimation for a notice issued after that date as discretionary. The difficulty is with notices covering periods before the amendment, and the High Courts have not agreed.

M/s New Morning Star Travels v Deputy Commissioner (ST) (Andhra Pradesh High Court, W.P. No. 12850 of 2022, 12 October 2023; read on Indian Kanoon, not found on gst.bharattax.net). A DRC-01A had been issued on 22 September 2020 for July 2017 to 2018-19. The file then passed to another officer. He issued a section 74 notice on 5 November 2021 for July 2017 to March 2021 without a fresh intimation, and passed an order on 31 March 2022. The Court noted that most of the period fell before the amendment. It held that “whenever any ambiguity arises with regard to any provision, the benefit must go to the tax payer”. The order was set aside, with a direction to issue an intimation under the pre-amendment rule first.

Manpar Exim Inc v Additional Director, DGGI (Delhi High Court, W.P.© 18204/2025, 1 December 2025). The notice was issued on 12 March 2025, in a case of alleged fraudulent credit. The Court distinguished its earlier decision in Gulati Enterprises v CBIC (W.P.© 5407/2020), where the notice predated the amendment and the intimation was held mandatory. After the amendment, “the issuance of pre-SCN consultation notice would not be mandatory”. The Court relegated the petitioner to appeal. It recorded that a challenge to the validity of Notification 79/2020 was pending before it in Zeta International v Additional Director.

M/s Goldstone Infra v Additional Commissioner (Telangana High Court, Division Bench, W.P. No. 1498 of 2026, 27 January 2026). A section 74 notice covered periods before 15 October 2020. The Court noted that the Andhra Pradesh decision in New Morning Star Travels and the Madras decision in Vishaka Exports were “divergent”. It held that the rule “does not refer to the ‘period’ for which the intimation relates”, and applied a test of prejudice. The petitioner had contested the notice on merits and showed no prejudice from the missing intimation, so the plea failed.

The position, then: for notices issued after 15 October 2020, the courts cited treat DRC-01A as discretionary. For notices covering earlier periods, the Andhra Pradesh and Delhi decisions above treat it as mandatory, while the Telangana Division Bench asks whether its absence caused prejudice.

Paying: DRC-03

Every payment at this stage is intimated in FORM GST DRC-03 under rule 142(2). This applies whether the person worked out the amount or the officer did in DRC-01A, and whether it is made under section 73(5), 74(5), 74A(8)(i) or 74A(9)(i).

DRC-03 records:

• the cause of payment. The causes are audit; inspection or investigation; after the notice but before the order; scrutiny; “intimation of tax ascertained through FORM GST DRC-01A”; payments in response to DRC-01B or DRC-01C; deposit of erroneous refunds; non-receipt of export proceeds; and others. Each comes with its reference number and date;
• the section under which the payment is made;
• the financial year, and tax, interest, penalty, fee and other amounts by Act and period, with the ledger used and the debit entry number;
• a verification by the authorised signatory.

The form was substituted by Notification No. 26/2022-Central Tax of 26 December 2022; its heading refers to payment against an “intimation of tax ascertained through FORM GST DRC-01A”. Notification 12/2024 substituted parts of it again.

Portal steps. The GST portal’s DRC-03 manual and FAQs, on tutorial.gst.gov.in, describe these steps:

1. Navigate to Services > User Services > My Applications, choose “Intimation of Voluntary Payment - DRC - 03”, and click New Application.
2. Select the cause of payment. For a DRC-01A, select the intimation reference number. The section and years then fill in, and the amounts fill in but can be edited. On a second DRC-03 against the same intimation, the balance is shown.
3. Select the section. According to the FAQ, sections 74A(8) and 74A(9) appear only where the tax period includes April 2024 or later.
4. If the cash ledger is short, use “Create Challan” from the same screen.
5. File with DSC or EVC. The liability register and the ledgers are debited and credited together.

Drafts are kept for fifteen days.

Two points in the portal’s own material need care. Its DRC-03 FAQ still says voluntary payment cannot be made “after 30 days of issue of SCN”. That reflects sections 73(8) and 74(8). For section 74A notices the statutory window is sixty days. The portal’s FAQ on determination of tax describes the sixty-day window for section 74A(8)(ii) and (9)(ii). The DRC-03 FAQ also states that the portal “does not allow for making partial payments against a liability raised in a SCN”. That restriction is the portal’s, not the Act’s.

The acknowledgement: DRC-04

Since 10 July 2024, rule 142(2) provides that “an acknowledgement, in FORM GST DRC-04 shall be made available to the person through the common portal electronically”. Until then, the officer issued DRC-04 “accepting the payment”. The form now acknowledges the payment “to the extent of the amount paid”, and states that it is “a system generated acknowledgement”. It confirms receipt. It does not decide whether the amount was enough. That remains open under sections 73(7), 74(7) and 74A(10).

Where a DRC-01A was answered, the officer’s view on adequacy is given in Part C, if at all.

Linking a payment to a demand: DRC-03A

A payment made through DRC-03 sits apart from any demand that is later created in the electronic liability register. If an order then confirms the demand, the register shows it unpaid, though the money has been paid. Rule 142(2B), inserted by Notification 12/2024 from 10 July 2024, deals with this. Where an amount payable under the demand sections (and several others) “has been paid … through an intimation in FORM GST DRC-03 … instead of crediting the said amount in the electronic liability register … against the debit entry created for the said demand”, the person “may file an application in FORM GST DRC-03A”. The amount is then credited against the demand “as if the said payment was made towards the said demand on the date of such intimation made through FORM GST DRC-03”.

Three features matter.

• Concluded cases are excluded. Under the proviso, where an intimation in DRC-05 concluding the proceedings has issued for the DRC-03 payment, DRC-03A “cannot be filed … in respect of the said payment”.
• The undertaking. DRC-03A requires an undertaking that the DRC-03 payment was intended for the demand named and “has not been used towards any other demand/ payment”. The person also undertakes to repay the amount with interest if any detail proves false.
• Which demands. The form refers to the demand order in DRC-07, DRC-08 or APL-04. The portal’s FAQ lists DRC-07, DRC-08, MOV-09, MOV-11 and APL-04.

Portal steps. The portal’s manual for DRC-03A describes filing it from My Applications. The person enters the DRC-03 ARN and selects the demand ID. A DRC-03 with a balance can be used in more than one DRC-03A, and a DRC-03 Register shows what remains. The FAQ is not consistent on eligibility. One answer limits DRC-03A to payments under “Voluntary” or “Others”. Another lists audit, enforcement, DRC-01A, show cause notice, scrutiny and the GSTR mismatch causes as well. A DRC-03 already used in a PMT-03A cannot be used.

DRC-03A matters for appeals. The pre-deposit under section 107(6) is computed against the demand. A payment that the register does not show against the demand may not be counted. See Appeals and Pre-Deposit.

What to have ready

Item	Where it comes from
The DRC-01A, or the scrutiny, audit or inspection communication	Portal, View Notices and Orders
The financial year, and whether it falls under section 73/74 or 74A	The intimation; the period
A computation of tax by head, period and place of supply	The books and returns
Interest under section 50 to the date of payment	Computed; cash ledger
Cash ledger balance, and any challan needed	Portal
The reasons for any part not accepted, with documents	The books; reconciliations
ARNs of earlier DRC-03 payments for the same issue	Portal

Who signs

DRC-01A Part B, DRC-03 and DRC-03A are each verified by the authorised signatory and filed with DSC or EVC.

Consequences of staying silent

The intimation is not itself a demand. If nothing is paid or said, the officer may issue the show cause notice. After that, settlement costs more:

• Up to 2023-24, the no-penalty window under section 73(8) is thirty days from issue of the notice. Under section 74(8), the window is thirty days with a 25 per cent penalty.
• From 2024-25, sections 74A(8)(ii) and (9)(ii) give sixty days, with the same penalties.
• After an order, only fraud cases get a reduction: 50 per cent, within thirty days under section 74(11) or sixty days under section 74A(9)(iii).

What can still be put right

• An intimation may be answered in Part B more than once. The portal’s manual allows replies “even after expiry of due date … till issuance of SCN DRC-01 or Acceptance of response to DRC-01A, whichever is earlier”.
• A partial payment can be topped up by a further DRC-03. The portal shows the balance against a system-generated DRC-01A.
• A DRC-03 filed under the wrong cause or period can be linked to the eventual demand through DRC-03A, unless a DRC-05 has concluded that payment.

The steps in order

1. Identify the year, and therefore whether section 73/74 or section 74A applies, and whether fraud or suppression is alleged.
2. Check the intimation’s computation against the books. Separate what is accepted from what is not.
3. Pay the accepted tax with interest, and penalty at 15 per cent where section 74(5) or 74A(9)(i) applies, through DRC-03. Select the DRC-01A as the cause.
4. File Part B of DRC-01A with the DRC-03 details and submissions on the rest.
5. Keep the DRC-04 and watch for Part C or a show cause notice.
6. If an order is later passed for the same amounts, file DRC-03A to credit the earlier payment against the demand.

The next guide covers the show cause notice itself: the reply in DRC-06, the hearing and adjournments, and the time limits for the order.