GST Show Cause Notice Rules 2026: Year-Wise Demand, Circular 258
Reports say CBIC Circular 258/04/2026-GST dated 26 October 2026 tells officers how to write a GST show cause notice: give the facts and evidence, show the demand year-wise, and do not allege fraud only because tax is unpaid. Circular 259/05/2026-GST covers the 10% appeal pre-deposit and refunds.
What changed
When: Circulars dated 26 October 2026, as reported. The reports do not state a separate start date. These are guidelines for tax officers.
| Before | Circulars 258 and 259 (reported) |
|---|---|
| Show cause notice content | |
| Often only the legal text | Facts, evidence, legal provisions and a quantified demand |
| Notice covering many years | |
| One lump demand | Demand shown year-wise (one report says must, the other says preferably) |
| Fraud sections 74 and 74A(5)(ii) | |
| Sometimes used for plain non-payment | Not to be used only because tax is unpaid or a discrepancy exists |
| Appeal pre-deposit | |
| Split sometimes unclear | 10% of the tax in dispute |
| Refund after you win | |
| Refund sometimes held back | Cannot be denied only because the department may appeal, unless the order is stayed |
What do the new GST show cause notice rules say?
Two reports (TaxGuru and Taxo, both dated 27 October 2026) say CBIC issued Circular No. 258/04/2026-GST on 26 October 2026, after the 57th GST Council meeting.
Both say a show cause notice must set out the taxpayer details, the tax periods, the facts, the evidence, the legal provisions and a quantified demand. Copying the section of law alone is not enough.
Must a GST notice show the demand year-wise?
Both reports say that when a notice covers more than one financial year, the tax, interest and penalty should be shown year-wise and by issue. TaxGuru says the demand must be year-wise. Taxo says preferably year-wise. We therefore cannot say it is a firm rule.
Both also say the central, state, integrated and union territory tax amounts should be shown separately.
Can an officer allege fraud only because tax is unpaid?
Both reports say no. Section 74 and section 74A(5)(ii), the sections on fraud, wilful misstatement or suppression, should not be used only because tax is unpaid or a scrutiny shows a difference.
The notice itself must carry the material that supports the allegation. If an officer changes the case in the order, the reports say your reply and evidence must still be examined properly.
What does Circular 259 say about appeal deposits and refunds?
Both reports say the pre-deposit for an appeal is 10% of the tax in dispute, not of the amount you admit.
If an order goes in your favour, you claim the refund in Form GST RFD-01 on account of the order. Both say the refund cannot be refused only because the department plans to appeal, unless the order is stayed.
Interest under section 115 runs from the date of each deposit. The reports say the rate is not yet settled.
What should a small business do if it gets a GST notice?
Read the notice date and the reply time. Check that it names your tax periods, shows the evidence and gives the demand for each year.
Reply on time. The circulars are guidelines for officers, and both reports say the guidelines must not be quoted in notices or orders, so do not rely on them as a legal right. Ask your tax adviser. Our DRC-06 reply format helps you prepare.
Frequently asked questions
What is CBIC Circular 258/04/2026-GST?
As reported, a circular dated 26 October 2026 that tells officers how to prepare GST show cause notices, with evidence and a year-wise demand.
Is a GST demand notice for many years allowed?
The reports say the demand should be shown year-wise. They also say courts differ on multi-year notices, so ask your adviser.
How much is the GST appeal pre-deposit?
As reported in Circular 259, 10% of the tax in dispute.
Is this confirmed on the CBIC website?
Not yet by us. TaxGuru and Taxo describe the circulars. We will update this page when we have read them on the official site.
GST notice mein fraud ka aarop kab lag sakta hai?
Reports ke mutabik sirf tax na bharne se section 74 nahi lagna chahiye. Notice mein fraud ka saboot likha hona chahiye.
Short summary in Hinglish
Reports ke mutabik CBIC ne 26 October 2026 ko Circular 258 jaari kiya: GST show cause notice mein facts, saboot aur saal-wise demand dikhani hogi. Circular 259 mein appeal ka pre-deposit disputed tax ka 10% bataya gaya hai. Official circular humne abhi nahi padha, isliye yeh reported hai.
