DRC-01A pre notice intimation: reply, pay, or wait?
The cheapest exit in GST is here, and so is the most common unforced admission.
DRC-01A is an intimation under Rule 142(1A) of tax ascertained as payable before a show cause notice is issued. It is not a notice and creates no liability. Part B allows a submission in reply. Paying at this stage under Section 73(5) attracts no penalty, and under Section 74(5) attracts fifteen percent penalty. Replying without paying preserves the dispute. What must be avoided is a payment or an admission that concedes the ingredient the department will later need for Section 74.
What it is, and what it is not
Rule 142(1A) permits the proper officer, before service of a notice, to communicate the details of tax, interest and penalty as ascertained by him. The form is DRC-01A, with Part B for the taxpayer's submission.
It is discretionary, not mandatory, so its absence is not a defect in a later notice. Its presence, however, is an opportunity.
It carries no adjudicatory force. A figure in DRC-01A is an ascertainment, not a determination, and it cannot be recovered.
The three responses, and when each is right
Pay, where the liability is genuinely payable and the amount is modest relative to the interest and penalty exposure. Under Section 73(5) and (6) payment before the notice closes the matter without penalty. Under Section 74(5) the penalty is fifteen percent. Use DRC-03 and select the correct cause of payment.
Reply in Part B, where the ascertainment is wrong. This is the underused option. A well documented Part B submission frequently prevents the notice, and where it does not, it becomes the first document in the file showing the position was taken early.
Reply and pay part, where some items are payable and others are not. Pay the payable items expressly and separately, and record that the balance is disputed. This is usually the strongest commercial position.
What should not be done is to pay the whole amount to make the matter go away, without a covering letter. That payment will be read as an admission if the same issue arises for another year.
The admission trap
A DRC-03 with the cause of payment recorded as voluntary, in a case where the department alleges suppression, is used in two ways. It establishes the tax position for later years, and it is cited as conduct indicating knowledge.
The answer is a covering letter, filed with the payment and acknowledged, recording that the payment is made to buy peace and without prejudice, that no ingredient of Section 74 is admitted, and that the position for other periods is reserved.
Where the payment is made under pressure during an investigation, the letter matters even more, and the recent authority on coerced payments makes the contemporaneous record decisive.
What to do on Monday
Treat every DRC-01A as a deadline; compute the Section 73(5) and 74(5) figures the day it arrives.
Reply in Part B with documents even where you intend to pay, so the record shows the position was taken.
Never make a DRC-03 payment without a covering letter recording that it is without prejudice.
Split payable and disputed items expressly rather than paying a consolidated figure.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Is a reply to DRC-01A mandatory?
No, but silence invites the notice and loses the cheapest exit. Reply where you have a position.
Can the department issue a notice despite a DRC-01A payment?
Where the payment is short of the ascertained amount, yes, for the balance. Where it is full and the matter falls within Section 73(6), the proceedings are concluded.
Does paying under DRC-01A stop interest?
Interest runs to the date of payment. Paying earlier reduces it, which is often the main financial reason to pay.
Can we take credit of tax paid through DRC-03?
Not as credit. It is a payment of tax. Whether the counterparty can take credit depends on the nature of the demand and the documentation.
Should we admit facts in Part B?
State facts accurately and completely, but do not characterise them. Facts are your case; characterisation is the department's burden.
In this cluster
- GST show cause notice: how to read it, and how to answer it
- Section 73 versus Section 74: where the department overreaches, and how to prove it
- Section 74A: the unified limitation regime from FY 2024-25
- From DRC-01 to DRC-07: the adjudication chain in one page
- Vague and omnibus notices: how Amrit Foods, Brindavan Beverages and Oryx Fisheries decide GST demands
- Suppression of facts under Section 74: what the department must actually prove
- Personal hearing under Section 75(4): the right, and the consequence of denying it
- Orders that travel beyond the notice: Section 75(7) in practice
- Limitation for GST demands: the year by year table you should keep in every file
- Section 168A extensions: the challenge to extended limitation, and where the litigation stands
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.