What actually happens when a buyer claims ITC from a cancelled supplier? (Practical experience neede

• What happens: The GST department flags the ITC mismatch because the supplier's GSTIN is cancelled, viewing it as an inadmissible claim.

• The Process: A formal Show Cause Notice (DRC-01) is issued, typically preceded by scrutiny notices (ASMT-10). This can arrive anywhere from months to years after the filing.

• The Defense: Businesses fight it using comprehensive proof of transaction (e-way bills, bank payment records, stock registers) and leverage High Court precedents (Suncraft Energy, D.Y. Beathel) protecting honest buyers.

• The Cost: It involves significant operational pain—requiring 18% annual interest on disputed amounts, legal fees, mandatory 10% pre-deposits for appeals, and litigation timelines stretching across 1 to 3 years.

Thank you this is incredibly helpful. One last question if you don't mind: In your practice, roughly what percentage of mid-size manufacturer clients have faced at least one DRC-01 notice due to a cancelled supplier GSTIN in the last 3 years? Is this something you see regularly, or is it rare? I'm trying to gauge how widespread this pain is.