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Every GST registered taxpayer must file at least one or more designated GST returns on time. On filing, if there happens to be any inconsistencies or errors in the information declared, the tax officers will conduct the scrutiny of these GST returns.
In this article, know more about the scrutiny process and options available for a taxpayer to respond to a scrutiny notice.
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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:
The tax officer can also take the following actions in cases such as:
The 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.
Form: 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:
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:
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:
Below are the steps to reply to a scrutiny notice:
Step 1: Select the ‘Replies’ tab on the case details page to view all the replies filed with the tax department. To add a reply, click ‘Notice’.
Step 2: The look of the reply page is as follows:
Step 3: Enter your reply and payment details if any.
Step 4: Click ‘ADD’ to add more details.
Step 5: Choose a file to upload with the reply if any.
Step 6: Select the verification check-box and the authorised signatory.
Step 7: Enter the place and click on ‘Preview’.
Step 8: Check if all the information provided is correct and click on ‘File’.
Step 9: The submit application page will be displayed
Step 10: Submit using DSC or EVC. A message indicating a successful reply will be displayed. The replies tab will get updated and will show the status as ‘Reply furnished, pending with tax officer’.
After submitting a reply, if the tax officer is satisfied with the reply, he will drop the proceeding by issuing an order intimating the same to the taxpayer. But, if the tax officer is unsatisfied, he will issue an order, demanding tax, penalty and interest, as the case may be. A taxpayer can view all the orders issued by the tax officer by following these steps:
Step 1: Click on the ‘Orders’ tab on the case details page.
Step 2: Click on the attachments link to view the order.
If the taxpayer does not respond to the scrutiny notice, then the tax officer will take action under section 73 (non-fraudulent) and 74 (fraudulent). He can issue a show-cause notice in form DRC-1 demanding the tax dues, together with interest and penalty. The amount of penalty will vary depending upon the grounds of the discrepancy found. Alternatively, the officer can recommend audits under section 65, 66 or 67.