Circular 258: GST Show Cause Notices, Adjudication and Appeals — What Officers Must Follow
CBIC Circular 258/04/2026-GST: how a show cause notice must be drafted, fraud allegations, four hearings, rectification and first appeal timelines.
Key takeaways: gst show cause notice
- A GST show cause notice must state specific allegations, quantify the demand and, for multiple years, split it by financial year.
- Fraud or suppression needs evidence of intent to evade tax; merely repeating the words is not enough.
- No more than three adjournments are allowed, so a maximum of four hearing opportunities; first appeals are due within three months.
Table of contents
Circular No. 258/04/2026-GST, dated 26 October 2026, sets out guidelines for officers on show cause notices (SCNs), adjudication orders and appeals under the CGST Act. It is issued under section 168(1) to improve the quality of orders, since vague or non-speaking orders lead to remands and reversals. The circular says its guidelines are illustrative and are not to be cited in SCNs or orders, but they show what taxpayers can expect.
Pre-notice intimation
Under Rule 142(1A), officers can send an intimation of the tax assessable under section 73, 74 or 74A in Part A of FORM GST DRC-01A before a formal SCN, where feasible, to encourage voluntary compliance.
What a show cause notice should contain
- Details of the noticee (name, GSTIN, registration status, jurisdiction and tax periods) and how the proceedings arose.
- Facts and evidence stated objectively, with neutral language such as “it appears that”.
- Only the legal provisions that apply, linked to each alleged violation.
- A concise statement of charges. The circular cites the Supreme Court’s decision of 19 August 2026 in G.R. Infra Project Ltd. v. State of Madhya Pradesh, holding that defects in an SCN cannot be cured later.
- A quantified demand, split by financial year where the notice spans several years.
- The adjudicating authority, the reply deadline and the consequences of non-compliance.
Fraud, wilful misstatement or suppression
- Sections 74(1) and 74A(5)(ii) apply only with evidence of fraud, wilful misstatement or suppression with intent to evade tax. Merely repeating those words in the notice is insufficient.
- Intent to evade is essential. An honest error, or an omission about facts both sides already know, is not suppression.
- These provisions cannot be used merely because a discrepancy surfaced in scrutiny, or simply because tax was not paid.
- A second SCN on the same facts for a later period, invoking fraud or suppression, is generally invalid unless there are new, independent grounds. Later notices should generally be issued under section 73 or 74A(5)(i).
- Section 74A applies from FY 2024-25 and provides a single period of 42 months from the due date of the annual return.
Hearings and orders
- Under section 75(5), no more than three adjournments may be granted, so a maximum of four personal hearing opportunities before an order is passed.
- Authorised representatives under section 116 should be allowed, and virtual hearings are encouraged.
- The order should be communicated promptly, preferably within one month of the last hearing.
- If the adjudicating officer is transferred, the successor must hold a fresh hearing.
- The order must be a speaking order, examine each reply and record whether it is accepted, partly accepted or rejected, with reasons. It cannot exceed the amount in the notice or rely on grounds not in the notice (section 75(7)).
- If AI tools are used, human oversight is required and the information must be independently verified; the issuing authority remains responsible.
- Penalties are to be imposed only after recording reasons and the legal basis.
Rectification (section 161)
An application for rectification must be filed within three months of the decision, order or notice, and the rectification order is to be passed within six months (no six-month limit for clerical or arithmetical errors). The error must be apparent on the face of the record; rectification is not a substitute for appeal.
First appeals
- Appeal must be filed within three months of communication (section 107(1)), with a further one month allowed for sufficient cause (section 107(4)).
- Appeals should, as far as possible, be decided within one year of filing, excluding stayed periods (section 107(13)).
- For withdrawal of an appeal under Rule 109C, where FORM GST APL-02 has been issued, the Appellate Authority approves the withdrawal and decides within seven days of filing.
- Additional grounds and additional evidence are allowed only in the circumstances the Act and Rule 112 specify, with reasons recorded.
- Cross-appeals are heard together and decided in a single composite order.
Related: GST notices: types and how to reply and Circular 259 on pre-deposit. If you have received a notice, see our notice reply service.
What to do next about gst show cause notice
Review how gst show cause notice affects your business: note the effective date, check your records and software, brief your team and keep a copy of the official text on file. Where the position is unclear for your case, take professional advice before filing or changing your process.
Official sources for gst show cause notice
Always read the original text. You can find notifications, circulars and rules on the CBIC Tax Information Portal and file returns and applications on the GST Portal. This guide on gst show cause notice is a summary and is not a substitute for the official text.
Frequently asked questions
How many personal hearings can a taxpayer get?
Up to four: no more than three adjournments are allowed under section 75(5).
What is the time limit for a first appeal?
Three months from communication of the order, extendable by one month for sufficient cause.
Can an officer allege fraud without evidence?
No. The circular says the notice must state specific allegations and facts showing intent to evade tax.
This article is for general information only and is not tax, legal or financial advice. It is based on the text of the notification or circular as published by CBIC. Rules, rates and criteria change, so confirm the latest position with the official source or a professional before acting.
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