What is a Scrutiny Assessment under GST?A GST officer will thoroughly check the GST return of a particular taxpayer based on certain risk parameters, to verify its correctness. If he finds any errors, he will issue a scrutiny notice to the registered taxpayer demanding an explanation. However, a personal hearing is not possible in this type of assessment. The taxpayer should admit the differential tax demanded with interest if any and pay it before replying to the notice together with justification. If the reply satisfies the officer, the taxpayer is intimated and the proceedings are dropped without any further action in form ASMT-12 (an order of acceptance of reply). Otherwise, further action can be taken by the GST officer in the following circumstances:
- If a taxpayer does not pay tax or provide an explanation
- The taxpayer does not reply or rectify the discrepancy within 30 days of the issue of notice
- The reply submitted is not satisfactory to the tax officer
- Conduct a tax audit under section 65
- Conduct a special audit under section 66
- Survey/inspection under section 67
- Initiate demand and recovery provisions
- Send notice of outstanding demand/shortfall in case there is wilful/no wilful intention of doing fraud under section 73/74 accordingly.
Objectives of the Scrutiny AssessmentThe main objective behind a scrutiny assessment is to verify the correctness of details submitted in GST returns like eligible Input Tax Credit (ITC) v/s actual claimed, tax payable v/s tax paid, claimed ineligible exemptions or ineligible ITC, etc. There are risk parameters pre-defined for a tax officer to decide whether scrutiny notice needs to be issued. If these indicate a high risk of default or fraud, then the tax officer can proceed to this assessment. The tax officer can also take this decision on his own. But, an order (except ASMT-12) cannot be passed as the next step under scrutiny assessment since it is not a legal or judicial proceeding. Read the section on the consequences of scrutiny assessment to know more.
GST Scrutiny Notice in ASMT-10: Forms, Timelines, Mode, and ContentsForm: A scrutiny notice is issued in Form ASMT-10 intimating discrepancies in GST return along with tax, interest and penalty if any. A reply should be submitted in Form ASMT-11. Mode: Tax officer can send the notice via SMS or email to the taxpayer. Timelines: There is no time limit defined for receiving a scrutiny notice. However, a taxpayer should respond to such notice within 30 days from the date of issue, or request for an extension, not more than 15 days. Contents: Contents of ASMT-10 are as follows:
- Basic details: GSTIN, name, address and tax period.
- Discrepancy Observed: Details of discrepancy if any and asking for an explanation.
- Particulars of the tax officer: DIN, name, signature and designation of the tax official issuing notice.
The following flowchart will explain the process of scrutiny at a glance:Viewing a scrutiny notice on the GST portal: Below are the steps to view any notice on the GST portal: Step 1: Login to the GST portal and select ‘View Additional Notices/Orders’ under the ‘Services’ tab. Step 2: On clicking ‘View Additional Notices’, the screen below will be displayed: Step 3: A taxpayer can view all the notices issued by the tax official by clicking on ‘View’. The following are the status updates on the GST portal regarding the scrutiny of a GST return:
- Pending for action by the tax officer
- Pending for reply by the taxpayer
- Reply furnished; pending for order by the tax officer
- Reply not furnished, pending for order
- An order issued for dropping proceedings
- Recommended for action under section 73
- Recommended for action under section 74
- Recommended for audit under section 65
- Recommended for special audit under section 66
- Recommended for survey/inspection under section 67
- Pending for order by the tax officer
How to respond to a Scrutiny Notice using ASMT-11?Before submitting a reply to the tax officer, the taxpayer should check for the correctness of the particulars in the notice. If any differential tax liability needs to be paid and the taxpayer agrees to the liability raised in the notice, he must pay it and thereafter reply to the notice in ASMT-11. Either of the two possibilities could arise:
- Agrees/admits the tax due as per the notice and had already paid it -Will declare the payment particulars while replying in ASMT-11, or
- Agrees/admits the tax due as per the notice, but yet to pay it – Will pay by either of the following options and thereafter reply in ASMT-11: