ITC claimed in GSTR-3B is compared with supplier data in GSTR-2A / 2B. Under Rule 88D the portal issues DRC-01C for excess ITC, and under Rule 88C it issues DRC-01B where output liability in GSTR-1 exceeds GSTR-3B.
GST, Chhattisgarh
What this notice means
These intimations require a reply or payment within a short time. If they are not answered, filing of GSTR-1 can be blocked. Mismatches also feature prominently in show cause notices.
Common reasons it is issued
- Supplier did not file or reported the invoice late
- ITC claimed in a different period
- Wrong GSTIN or invoice details
- Supplier registration cancelled retrospectively
Time limit to respond
DRC-01B and DRC-01C must be answered within 7 days (Part B), by payment or explanation.
Documents to keep ready
- GSTR-2A / 2B and 3B for the period
- Purchase register and invoices
- Payment proof and supplier confirmations
How we handle it
- Prepare an invoice-wise reconciliation
- Explain timing and reporting differences with evidence
- Pay genuine excess through DRC-03
- Defend genuine ITC with case laws on supplier default
Points to note
- Courts have protected genuine buyers in several cases where suppliers defaulted. Evidence of payment and receipt of goods is key
What usually comes next
- Show Cause Notice u/s 73 / 74 / 74AWhen a mismatch becomes a demand
- Unblocking of Electronic Credit Ledger under Rule 86AIf the credit ledger is blocked
- ASMT-10 Scrutiny NoticeScrutiny of returns
Frequently asked questions
Will ITC be denied just because the supplier did not pay tax?
Not automatically. Courts have held that genuine purchasers with proper evidence should not be penalised without enquiry against the supplier, though the law requires reflection in 2B.
Official sources
- GST portalgst.gov.inView notices, file replies and first appeals
- CBIC – GSTcbic-gst.gov.inCGST Act, rules, notifications and circulars
Received a notice or an order?
Call us to talk it through. Keep the notice and its response date handy.