Section 61 provides that PO may scrutinize the return furnished by RP to verify the correctness of the return. In case of discrepancies, he may issue notice as explained below.

Section 61(1) read with Rule 99(1)

To verify the correctness of the return,

the proper officer (PO) may scrutinize the return and related particulars furnished by the RP or with reference to the information available with him

and in case of any discrepancy, he shall issue a notice to him in GST ASMT-10, informing him of such discrepancy and

seeking his explanation thereto within such time, not exceeding 30 days from the date of service of the notice or such further period as may be permitted by him and

also, where possible, quantifying the amount of tax, interest and any other amount payable in relation to such discrepancy.

After furnishing of the return, the PO may scrutinize the return and related particulars (not documents) to verify its correctness.

In case any discrepancy is noticed, the PO shall inform the RP about such discrepancies in ASMT-10 and seeks his explanation within 30 days or extended period.  

If possible, he may also quantify tax, interest and any other amount payable in relation to such discrepancy.

Rule 99(2)

The registered person may

accept the discrepancy mentioned in the notice issued u/sr (1), and pay the tax, interest and any other amount arising from such discrepancy and inform the same or

furnish an explanation for the discrepancy

in GST ASMT-11.

RP may

accept the discrepancies and pay the tax, interest and other amount and inform the same or

furnish an explanation for the discrepancy

in GST ASMT-11

Section 61(2) read with Rule 99(3)

Where the explanation furnished by the RP or the information submitted u/sr (2) is found to be acceptable,

the proper officer shall inform him accordingly in GST ASMT-12 and

no further action shall be taken in this regard.

If PO is satisfied with the explanation provided by RP, RP shall be informed in ASMT-12 and not further action shall be taken in this regard.

Section 61(3)

In case no satisfactory explanation is furnished within a 30 days of being informed by the proper officer or such further period as may be permitted by him or

where the RP, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted,

the proper officer may initiate appropriate action to

conduct audit u/s 65 or

direct the conduct of a special audit u/s 66 or

undertake procedures of inspection, search and seizure u/s 67, or

proceed to determine the tax and other dues u/s 73 or 74.

If RP fails to furnish any satisfactory explanation to the PO within 30 days of being informed/ extended period or

RP fails to take corrective action after accepting discrepancies

the PO may initiate appropriate action to

conduct audit u/s 65 or

direct the conduct of a special audit u/s 66 or

undertake procedures of inspection, search and seizure u/s 67, or

proceed to determine the tax and other dues u/s 73 or 74.

Question & Answer

Instruction No. 02/2022-GST/dated-22-03-2022

Till the time a Scrutiny Module for online scrutiny of returns is made available on the CBIC-GST application, as an interim measure, the following SOP is being issued by the Board in order to ensure uniformity in selection/ identification of returns for scrutiny, methodology of scrutiny of such returns and other related procedures.

2.2

Provisions of section 61 read with rule 99 suggest that scrutiny of returns, inter-alia, entails the following:

(a) Selection of returns furnished by a RP for scrutiny, preferably based on robust risk parameters.

(b) Scrutiny of the returns and related particulars furnished by the RP to verify the correctness of the return. Information available with the PO in various returns and statements furnished by the RP and the data/details made available through various sources like DGARM[i], ADVAIT, GSTN, E-Way Bill Portal, etc. may be relied upon for this purpose.

(c) Informing the RP of the discrepancies noticed, if any, along with quantification of the amount of tax, interest and any other amount payable in relation to such discrepancy and seeking his explanation thereto.

(d) Where the RP accepts the discrepancy and pays the tax, interest and any other amount arising from such discrepancy or where the explanation furnished by the RP is found acceptable, conclude the proceedings after informing the registered person.

(e) Where no satisfactory explanation is furnished by the RP or where the RP, after accepting the discrepancy, fails to pay the tax, interest and any other amount arising from such discrepancy, initiate appropriate action including those u/s 65 or 66 or 67, or determination of tax and other dues u/s 73 or 74 of the CGST Act.

3.1

Selection of returns for scrutiny is to be based on specific risk parameters.

For this purpose, DGARM has been assigned the task to select the GSTINs registered with Central tax authorities, whose returns are to be scrutinized, and to communicate the same to the field formations from time to time through the DDM portal (to the nodal officer of the Commissionerate concerned) for further action.

3.2

For convenience of field officers, DGARM would also provide some relevant data (along with likely revenue implication) pertaining to the returns to be scrutinized through the DDM portal. It may be noted that the data provided by the DGARM is generated at a particular point of time which may undergo change at the time of scrutiny of returns by the proper officer due to subsequent compliances carried out by the taxpayer or by the suppliers of the taxpayer. The proper officer shall, therefore, rely upon the latest available data.

4

Vide Circular No. 3/3/2017 – GST dated 05.07.2017, “Superintendent of Central Tax” has been assigned the functions as the proper officer in relation to section 61(1) and (3) of the CGST Act.

Accordingly, scrutiny of returns of a taxpayer may be conducted by Superintendent of Central Tax in-charge of the jurisdictional range of the said taxpayer.

5

Once the list of GSTINs, whose returns have been selected for scrutiny, is communicated to the field formations, the proper officer, with the approval of the divisional Assistant / Deputy Commissioner, shall finalize a scrutiny schedule. Such scrutiny schedule will specify month-wise schedule for scrutiny in respect of all the GSTINs selected for scrutiny. While preparing the scrutiny schedule, the scrutiny of the GSTINs, which appear to be riskier based on the likely revenue implication indicated by DGARM, may be prioritized. Such scrutiny schedules in respect of all the ranges within the CGST Zone shall be reported to the DGGST[ii] by the concerned Zone, in the format enclosed as Annexure A.

5.2 The proper officer shall conduct scrutiny of returns pertaining to minimum of 3 GSTINs per month. Scrutiny of returns of one GSTIN shall mean scrutiny of all returns pertaining to a financial year for which the said GSTIN has been identified for scrutiny.

For Annexure A, refer Instruction No. 02/2022-GST/dated-22-03-2022

6.1

PO shall scrutinize the returns and related particulars furnished by RP to verify the correctness of the returns. Information available with the PO on the system in the form of various returns and statements furnished by the RP and the data/details made available through various sources like DGARM, ADVAIT, GSTN, E-Way Bill Portal, etc. may be relied upon for this purpose

6.2

Indicative list of parameters for scrutiny

For convenience of PO, an indicative list of parameters to be verified is enclosed as Annexure B. It may be noted that the said list is only indicative, and not exhaustive. PO may also consider any other parameter, as he may deem fit, for the purpose of scrutiny.

For Annexure C and D, refer Instruction No. 02/2022-GST/dated-22-03-2022

6.3

PO is expected to rely upon the information available with him or with the department. As far as possible, scrutiny of returns should have minimal interface between PO and RP and, there should normally not be any need for seeking documents/ records from the taxpayers before issuance of FORM GST ASMT-10.

6.4

PO shall issue a notice to RP in FORM GST ASMT-10 informing him of the discrepancies noticed and seeking his explanation thereto. While issuing such notice, PO may, as far as possible, quantify the amount of tax, interest and any other amount payable in relation to such discrepancies.

It may also be ensured that the discrepancies so communicated may, as far as possible, be specific in nature and not vague or general.

There may be cases where RP may already have made additional payment of tax, cess, etc., after filing of the returns for the relevant tax period, through FORM GST DRC-03. The payments thus made through FORM GST DRC-03 may also be taken into consideration while communicating discrepancies to the taxpayer in FORM GST ASMT-10.

6.5

For each GSTIN identified for scrutiny for a financial year, PO is required to scrutinize all the returns pertaining to the corresponding Financial Year under consideration and a single compiled notice in FORM GST ASMT-10 may be issued to the taxpayer for that financial year.

6.6

RP may accept the discrepancy mentioned in ASMT-10, and pay the tax, interest and any other amount arising from such discrepancy through FORM GST DRC-03 and inform the same or may furnish an explanation for the discrepancy in FORM GST ASMT-11 to the proper officer within the time period prescribed u/s 99 of CGST Rules.

6.7

Where the explanation furnished by the registered person or the information submitted in respect of acceptance of discrepancy and payment of dues is found to be acceptable by the Proper Officer, he shall conclude the proceedings by informing the registered person in FORM GST ASMT-12.

6.8

In case no satisfactory explanation is furnished by the RP in FORM GST ASMT-11 within a period of 30 days of being informed by PO or such further period as may be permitted by him or where RP, after accepting the discrepancies, fails to pay the tax, interest and any other amount arising from such discrepancies, PO, may proceed to determine the tax and other dues u/s 73 or 74.

For proceeding u/s 73 or 74, monetary limits as specified in Circular No. 31/05/2018-GST dated 9th Feb 2018 shall be adhered to. However, if PO is of the opinion that the matter needs to be pursued further through audit or investigation to determine the correct liability of the said RP, then he may refer the matter to the jurisdictional Principal Commissioner / Commissioner through the divisional Assistant / Deputy Commissioner, for the decision whether the matter needs to be referred to Audit Commissionerate or Anti-evasion Wing of the Commissionerate, as the case may be.

7.1

Scrutiny of returns is to be conducted in a time bound manner, so that necessary action to safeguard revenue may be taken up expeditiously. In this regard, the following timelines may be observed by all concerned:

SN

Process/Event

Timeline/Frequency

(i)

Communication of list of GSTINs selected for scrutiny (by DGARM to the nodal officer of the Commissionerate concerned)

From time to time.

(ii)

Distribution of the list of GSTINs selected for scrutiny by the nodal officer to the proper officers concerned.

Within 3 working days of receipt of the list from DGARM.

(iii)

Finalization of scrutiny schedule with the approval of the concerned Assistant/Deputy Commissioner

Within 7 working days of receipt of the details of the concerned GSTINs from the nodal officer.

(iv)

Sharing the scrutiny schedule by the zone with DGGST

Within 30 days of receipt of the details of the concerned GSTINs from DGARM.

(v)

Issuance of notice by PO for intimating discrepancies in GST ASMT-10, where required

Within the month, as mentioned in scrutiny schedule for scrutiny of the returns of the said GSTIN.

(vi)

Reply by RP in FORM GST ASMT-11

Within a period of 30 days of being informed by PO in GST ASMT-10 or such further period as may be permitted by him

(vii)

Issuance of order in GST ASMT12 for acceptance of reply furnished by RP, where applicable

Within 30 days from receipt of reply from RP in GST ASMT-11

(viii)

Initiation of appropriate action for determination of the tax and other dues u/s 73 or 74, in cases where no reply is furnished by RP

Within a period of 15 days after completion of 30 days of issuance of notice in GST ASMT-10 or such further period as permitted by PO

(ix)

Initiation of appropriate action for determination of the tax and other dues u/s 73 or section 74, in cases where reply is furnished by RP, but the same is not found acceptable by PO

Within 30 days from receipt of reply from RP in FORM GST ASMT-11

(x)

Reference, if any, to the Commissioner for decision regarding appropriate action u/s 65 or 66 or 67

Within 30 days from receipt of reply in GST ASMT-11 or

within 45 days of issuance of GST ASMT-10, in case no explanation is furnished by RP.

8

A Scrutiny Register shall be maintained by PO in respect of the GSTINs allotted for scrutiny, in the format detailed in Annexure C. The progress of the scrutiny exercise as per the scrutiny schedule shall be monitored by the jurisdictional Principal Commissioner/ Commissioner on monthly basis. Further, a Scrutiny Progress Report, in the format detailed in Annexure D, shall be prepared by the proper officer at the end of every month. The monthly Scrutiny Progress Report for each Commissionerate of the CGST Zone shall be compiled for each month and forwarded to the Director General of Goods and Service Tax (DGGST) by the Principal Chief Commissioner/Chief Commissioner of the concerned Zone by 10th day of the succeeding month. The DGGST, in turn, would present the progress report to the Board, through the GST Policy Wing, by the 20th day of the corresponding month.

For Annexure C and D, refer Instruction No. 02/2022-GST/dated-22-03-2022

9

Till the time scrutiny module is made available on the CBIC-GST application/AIO for CBIC officers, the aforesaid interim procedure for scrutiny of returns may be conducted on manual basis. Any communication with the taxpayer for the purpose of scrutiny shall be made with the use of DIN as per the guidelines mentioned in the Circular No. 122/41/2019-GST dated 5th November 2019.