GSTR-1, E-Invoice and GSTR-3B Mismatch Notice: How to Reconcile and Reply

One of the most common GST notices is a scrutiny notice that points out a difference between the sales shown in GSTR-1, the e-invoice data and the tax paid in GSTR-3B. Many of these differences are timing or data-entry issues that can be explained. This guide shows how to reconcile the figures and respond to the notice.

Why Do Mismatches Happen?

• Invoices reported in GSTR-1 in a different period from the one in which tax was paid in GSTR-3B
• E-invoices generated but cancelled or amended without matching changes in GSTR-1
• Credit notes and debit notes reported in one return and not the other
• Exports and supplies to SEZ treated differently in each return
• Advance receipts adjusted against later invoices
• RCM liability not reflected consistently
• Data entry errors, rounding and wrong tax-rate selection

What Does the Notice Usually Look Like?

Scrutiny of returns begins with an intimation under Section 61 and Rule 99, in the prescribed form, setting out the discrepancy and asking you to explain it or pay the tax and interest. You are allowed time to reply, commonly thirty days, and the officer can extend it. Treat this intimation seriously. If you do not respond, the department may issue a show cause notice for demand, penalty and interest, as discussed in our guide on Section 73 and Section 74 notices.

How Do You Reconcile the Figures?

• Download GSTR-1, GSTR-3B and the e-invoice and e-way bill data for the same period
• Prepare a month-wise reconciliation of outward supplies from your books, GSTR-1 and GSTR-3B
• Mark each difference as timing, error, cancelled document, credit note or genuine short payment
• Attach invoice-level working for each difference
• Compute interest on any genuine short payment and consider paying it with the reply

Our article on ITC mismatch between GSTR-2B and GSTR-3B is the corresponding guide for the purchase side.

What About E-Invoice Issues?

E-invoices are reported to the invoice registration portal and flow into the return. If an e-invoice was wrongly generated, it must be cancelled within the time permitted on the portal, and later corrections are done through credit notes or amendments in the return. Check whether your business is covered by the threshold, as set out in our article on mandatory e-invoicing. The amendment facilities available on the GST portal change from time to time, so confirm what is open for your period.

How Should You Reply to the Notice?

Reply within the time allowed, on the portal, in the prescribed form. A good reply contains:

• A short covering letter identifying the notice, period and discrepancy
• A clear reconciliation statement, with invoice references
• Supporting copies of invoices, credit notes and e-invoice acknowledgements
• Proof of any tax and interest paid, where you accept a liability
• A request for a personal hearing if the officer is not satisfied

What If the Department Issues a Demand Anyway?

If the officer proceeds to a show cause notice or an order, you can reply again, seek a hearing and, if needed, appeal under Section 107. For periods from the financial year 2024-25, demands for the wrongly availed or short-paid tax are being issued under Section 74A, so check the section cited in the notice and the time limits that follow. Review our guide on how to defend a GST demand for the stages.

Can Voluntary Payment Help?

Where part of the difference is genuine, paying the tax with interest early, and recording this against the notice, reduces exposure to penalty. Take advice before you pay under protest or admit liability, as the way you pay affects later options.

How Do You Avoid Future Mismatches?

Reconcile GSTR-1 with books before filing GSTR-3B each month. Reconcile e-invoice data with your ERP. Record credit notes in the same cycle. Review the annual return against monthly returns before filing it.

Need Help With a GST Mismatch Notice?

Our GST and Tax practice prepares reconciliations and replies for businesses across Chennai. Book a consultation through our website and bring the notice, your returns and your sales register. This article is general information and not legal advice. Please confirm current forms, time limits and portal facilities.