File Scrutiny Assessment

The word ‘Scrutiny’ has not been defined in GST Laws. According to Cambridge dictionary word ‘Scrutiny’ means, “The careful and detailed examination of something in order to get information about it”.

Section 61 of CGST Actread with Rule 99 of CGST Rules contains the provisions in relation to scrutiny of return. As per Section 61(1), “The proper officer may scrutinise the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto.”

Scrutiny Assessment

‘Directorate General of Analytics and Risk Management’ (DGRAM) 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 nodal officer of the Commissionerate concerned for further action.

The proper officer shall scrutinize the returns and related particulars furnished by the registered person to verify the correctness of returns. Information available with the proper officer on the system and the details made available through various sources like DGRAM, ADVAIT, GSTN, E-WAY Bill portal shall be relied upon for the purpose of scrutiny.

As on date a Scrutiny Module for online scrutiny of returns is not available on the CBIC-GST application and hence, as an interim measure, a Standard Operating Procedure (SOP) is being issued by the CBIC in order to ensure uniformity in selection/ identification of returns for scrutiny, methodology of scrutiny of such returns and other related procedures.

Legal Provisions

Section 61 of the CGST Act, 2017 read with rule 99 of the CGST Rules, 2017 provides for scrutiny of returns and related particulars furnished by the registered person.

a. Proper officer may scrutinize the return and related particulars furnished to verify the correctness of the return and inform the Registered Taxpayer of the discrepancies noticed in Form GST ASMT – 10.

b. The registered person may accept the discrepancy mentioned in the notice and pay the tax, interest and any other amount as per discrepancy and inform the same, or furnish an explanation for the discrepancy in FORM GST ASMT-11 to the proper officer.

c. If the explanation furnished or the information submitted is found to be acceptable, the proper officer shall inform him accordingly in FORM GST ASMT-12.

d. In case no satisfactory explanation is furnished within a period of thirty days or after accepting the discrepancies, the person 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.

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

The tax officer can also take the following actions in cases such as:

  • 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 Assessment.

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.

GST Scrutiny Notice in ASMT-10: Forms, Timelines, Mode, and Contents

Form: A scrutiny notice is issued in Form ASMT-10 intimating discrepancies in GST return along with tax, interest andpenalty 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:

  1. Basic details: GSTIN, name, address and tax period.
  2. Discrepancy Observed: Details of discrepancy if any and asking for an explanation.
  3. Particulars of the tax officer: DIN, name, signature and designation of the tax official issuing notice.

Process Of scrutiny :

Applicable Rules

Rule 99 of the CGST Rules, 2017, provide for manner and procedure for provisional assessment under section 61 of the CGST Act, 2017 which inter-alia, contain the following :

Sub-Rule Providing For
1

 Provides for initiating scrutiny of returns furnished by registered person, based on information available; issue notice on finding discrepancies, seeking explanation, quantifying the liability and extending the period of 30 days if deemed fit.
2

 Provides the manner in which registered person may either accept the discrepancy or furnish an explanation to the proper officer.
3 Manner in which proper officer should send the intimation to the registered person in case the information / explanation is, acceptable.
Applicable Forms

According to rule 99 of CGST Rules, 2017, following forms are required to be used for various purposes and are to be filed online.

S.No. Form No. Purpose
1 GST ASMT-10 Issuance of notice by proper officer on noticing discrepancies on return
2 GST ASMT-11 Response by registered person against ASMT-10 by way of accepting the discrepancy or submitting explanation
3 GST ASMT-12 Intimation by proper officer on finding explanations satisfactory
FAQs

Frequently Asks Questions

Scrutiny assessment refers to the examination of an income tax return by giving an opportunity to the assessee to substantiate the income declared and the expenses, deductions, losses, exemptions, etc. claimed in the return with the help of evidence.
During the course of scrutiny, the assessing officer gets an opportunity to conduct enquiries, as deemed fit, from the assessee and from third parties.
The exercise is aimed at ascertaining whether the income in the return is correctly shown by the assessee and whether the claims for deductions, exemptions, etc. are factually and legally correct.

If any omissions, discrepancies, inaccuracies, etc. come to light as a result of this examination, the assessing officer makes his own assessment of the assessee’s taxable income after taking into consideration all the relevant facts. These assessments are made under section 143(3) of the Income Tax Act. The assessing officer may charge mandatory additional interests and may levy penalties and may initiate prosecution proceedings.

Tax officer would perform tests and processes to confirm the correctness and genuineness of various claims, deductions, etc. made by the taxpayer in the income tax return, and to initiate a scrutiny assessment, the Income Tax officer must first issue an income tax notice u/s 143(2). The time limit to issue notice is three months from the end of the relevant F.Y. in which the return is filed.

Limited Scrutiny cases shall remain confined only to the specific reasons/issues for which the case has been picked up for scrutiny.

Don’t worry!! Our expert will help you to choose a best suitable plan for you. Get in touch with our team to get all your queries resolved. Write to us at info@finxurance.com or call us @+91 9643 203 209.