On 22nd March 2022, Central Board of Indirect Taxes and Customs (CBIC) has issued the Standard Operating Procedures for scrutiny of returns for FY 2017-18 and FY 2018-19 respectively. Now, in this instruction, the detailed procedure of the selection of the cases for scrutiny, assignment of Proper Officer, parameters on which the cases should be scrutinized have been prescribed in the Instruction.
The scrutiny of the Returns is governed by the Section 61 of the CGST Act read with Rule 99 of the CGST Rules.
The section along with the rule lays down the procedure for the scrutiny for the returns. In this context, it is pertinent to note that the detailed procedure has been laid down in this said instructions.
Let’s understand the procedure of the Standard of Procedures for selection of GST returns for scrutiny:-
- Selection of scrutiny of returns
Directorate General of Analytics and Risk Management (DGARM) has been assigned to select the GSTINs on the basis of the specified parameters and the same shall be assigned to the Nodal office of the Commissionerate concerned through the DDM portal. It is specified mentioned in the Instructions that till the time, there has not been an online scrutiny system being deployed in the CBIC GST application, this Standard Operating Procedure shall be taken as an Interim measure. For the convenience of the field officers, the DGARM shall provide the relevant data along with the revenue implications to be scrutinized through DDM portal. The data provided by the DGARM can be changed later on depending upon the information being available at the time of the scrutiny of the GST returns.
- Proper Officer for the scrutiny of returns
As per the instructions, it is clearly laid down that as per the circular no. 3/3/2017 – GST dated 05-07-2017, “Superintendent of Central Tax” has been assigned as the Proper Officer for the purpose of sub section (1) and (3) of section 61 of the CGST act.
- Scrutiny schedule, Reporting and Monitoring
After receiving the list of GSTINS selected for the scrutiny, the Proper Officer shall make the “Scrutiny Schedule” with the approval of the divisional Assistant / Deputy Commissioner. In the Scrutiny schedule, it has to be specifically mentioned regarding the month wise schedule of the GSTINs selected for the scrutiny. The selection of the GSTINs shall be based on the risk based perimeters. That is, those GSTINs whose revenue implications are high shall be picked up first.
It is pertinent to note that for the GSTIN selected for the scrutiny shall be scrutinized for the complete financial year.
The said schedules of all the ranges shall be shared with the Directorate General of Goods and Services Tax (DGGST) of the concerned zone. The Proper officer shall have to conduct the minimum of 3 GSTINs per month for the scrutiny.
A Scrutiny register shall be maintained by the Proper Officer in the format prescribed in the Instructions for the GSTINs allotted for the purpose of scrutiny. The progress of the scrutiny shall be monitored by the Principal Commissioner / Commissioner on monthly basis. For the purpose of reporting, a Scrutiny Progress Report (Annexure D as per Instructions) shall be compiled by the Proper Officer at the end of every month. The progress reports of each Commissionerate of the CGST zone shall be compiled for each month and presented to the DGGST by 10th of the corresponding month. The DGGST shall present the monthly progress reports to the Board by 20th of the corresponding month.
- Process and timeline of the Scrutiny
For the purpose of the scrutiny, the Proper Officer shall scrutinize the returns filed by the registered persons along with on the basis of information available through various sources like DGARM, ADVAIT, GSTN, E way bill portal, etc. It is pertinent to note that the said procedure emphasises on minimum interaction between the Proper Officer and the Registered Taxable Person.
A list of parameters have been listed in the Instructions in Annexure B which lays down the lists according to which the scrutiny may be carried on by the Proper Officer. The list is not exhaustive and the Proper Officer may also consider any other parameters as he may deem fit for the scrutiny.
The Proper Officer, after being satisfied from the given parameters and other parameters, as he may deem fit, shall issue the Form GST ASMT 10 for the purpose of scrutiny. It is pertinent to note that the Proper Officer shall go through all the filed returns for the said financial year and shall issue a single Form GST ASMT 10 for a single year. In the GST ASMT 10, the Proper Officer may, as far as possible, quantify the tax, interest and penaly, if any, for the said discrepancies.
After issuing the Form GST ASMT 10, the registered person shall have to reply within 30 days or the time prescribed in the Form GST ASMT 10 to reply to the discrepancies and pay the tax, interest and penalty, if any, through Form GST DRC 03 and inform regarding the payment or the explanations regarding the discrepancies through the Form GST ASMT 11 within the time specified in the Rule 99 of the CGST rules.
If the Proper Officer finds the reply in Form GST ASMT 11 to be suitable and satisfactory, then the Proper Officer shall conclude the case by issuing the Form GST ASMT 12.
If the Registered taxable person fails to provide the suitable explanation within the time limit provided or the explanation provided by the registered taxable person founds not satisfactory by the Proper Officer and where the registered person after accepting the discrepancies fails to deposit the tax, interest and other amount arising from such discrepancies. Then, the Proper Officer shall direct the Registered taxable person to pay the tax and other amount under section 73 and 74 of the CGST act after taking into account the monetary limit as specified in the Circular No. 31/05/2018 – GST dated 9th February 2018. If the Proper Officer thinks that the matter to be pursued through the audit or investigation to determine the correct tax liability of the said person i.e. the matter needs to be pursued through under section 65 or section 66 or section 67, then the matter may be referred 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.
Timelines for scrutiny of Returns
| S. no. | 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 three working days of receipt of the list from DGARM. |
| (iii) | Finalization of scrutiny schedule with the approval of the concerned Assistant/Deputy Commissioner | Within seven 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 thirty days of receipt of the details of the concerned GSTINs from DGARM. |
| (v) | Issuance of notice by the proper officer for intimating discrepancies in FORM 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 the registered person in FORM GST ASMT-11 | Within a period of thirty days of being informed by the proper officer in FORM GST ASMT-10 or such further period as may be permitted by the proper officer |
| (vii) | Issuance of order in FORM GST ASMT- 12 for acceptance of reply furnished by the registered person, where applicable | Within thirty days from receipt of reply from the registered person in FORM GST ASMT-11 |
|
(viii) | Initiation of appropriate action for determination of the tax and other dues under section 73 or section 74, in cases where no reply is furnished by the registered person | Within a period of fifteen days after completion of the period of thirty days of issuance of notice in FORM GST ASMT-10 or such further period as permitted by the proper officer |
| (ix) | Initiation of appropriate action for determination of the tax and other dues under section 73 or section 74, in cases | Within thirty days from receipt of reply from the registered person in FORM GST ASMT-11 |
| where reply is furnished by the registered person, but the same is not found acceptable by the proper officer | ||
|
(x) | Reference, if any, to the Commissioner for decision regarding appropriate action under section 65 or section 66 or section 67 | Within thirty days from receipt of reply from the registered person in FORM GST ASMT-11 or within a period of forty-five days of issuance of FORM GST ASMT-10, in case no explanation is furnished by the registered person. |
- Parameters for the scrutiny of the GST returns
CBIC has laid down various parameters in the Annexure B of the Instruction in which certain checks have been laid down while scrutinizing the GST returns of the Registered Taxable Persons which are as follows:-
| S.No. | Parameters | Comparison between |
| 1 | Tax liability on outward supplies | Table 3.1(a) and table 3.1(b) of Form GSTR 3B in comparison with table 4 (other than table 4B), table 5, table 6, table 7A(1), table 7B(1), table 11A and table 11B (along with net effect of amendments thereof in Table 9, Table 10 and 11(II) of Form GSTR 1. |
| 2 | Tax liability on account of “Inward supplies liable to RCM” | The tax liability on account of RCM shall be compared with the tax payment on account of RCM. Also in the case of RCM from registered taxable person, the RCM liability shown in the table 4A(3) shall not be less than the RCM shown in the Form GSTR 2A. |
| 3 | ITC availed of Input supplies from ISD | Table 4A(4) of GSTR 3B to be compared with the GSTR 2A. |
| 4 | ITC availed in respect of “All other ITC” | Table 4A(5) of GSTR 3B to be compared with the Table 3 and Table 5 along with adjustment of Table 4 and 6 of GSTR 2A |
| 5 | Value of Outward supplies in comparison with TDS / TCS under GST | The value of Outward supplies declared in the Table 3.1(a) of GSTR 3B shall not be less than the TDS / TCS value as per column 6 of Table 9 of Form GSTR 2A |
| 6 | Liability of Outward supplies with E way bill | The liability of outward supplies shall be compared with the value of liability of tax declared in the E way bill. |
| 7 | ITC from suppliers whose registration have been cancelled retrospectively | The ITC from the cancelled suppliers shall be checked from the date of retrospective cancellation and if the ITC has been taken after the date of cancellation, then the ITC shall be disallowed. |
| 8 | Ineligible ITC from non filers of GST returns | The ITC from the dealers who have not filed their returns shall be disallowed for the respective period. |
| 9 | Whether the GSTR 3B by the supplier is filed after the time allowed under section 16(4) | In case the ITC of the previous year is filed after time limit prescribed in the section 16(4) |
| 10 | ITC availed for Import of goods | The detail of ITC availed on account of ITC availed may be verified with the ICEGATE portal. |
| 11 | Reversal of ITC as per Rule 42 and 43 | The Table 4B of GSTR 3B shall be verified with the reversal |
| 12 | Interest liability on account of late payment of GST | To check whether interest u/s. 50 has been paid for the payment of GST |
| 13 | Late fee as per section 47 | To check whether late fee has been paid for filing the GST returns. |
