Handling GST notices, scrutiny, assessment, and adjudication requires a systematic approach: timely review of the notice, gathering evidence (invoices, ledgers), filing detailed, substantiated replies on the GST portal, and attending personal hearings. Key actions include paying admitted tax via Form DRC-03 and leveraging professional advice for complex disputes.
How to handle GST Notices, Scrutiny, Assessment and Adjudication
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.
Documentation and Evidence Preparation. Prepare and organize all relevant documents and evidence that support your response to the notice. This may include tax invoices, bank statements, ledgers, contracts, and correspondence that can substantiate your claims or clarify the discrepancies.
Adjudication Notice under GST
The GST department issues adjudication notices under Sections 73 and 74 of the CGST Act, 2017. These notices allow registered persons to present their side and respond to the adjudicating authority's accusations. From FY 2024–25 onwards, Section 74A applies to fresh demands.
Now, let's dive into the 5 common steps and explore the world of claim adjudication together.
Meaning of Assessment
Such assessments are subject to adjudication procedure which involves observance of principles of natural justice. The person who is assessed is called assessee (i.e. taxable person) and the person who assesses is called adjudicating authority.
Section 61 of GST Act has empowered GST officer to verify the correctness of returns and the related particulars furnished by the registered persons. After scrutiny of the returns if any discrepancies is noticed then the proper officer shall inform by serving notice in FORM ASMT-10.
Timeline for Completion of Scrutiny: The scrutiny process itself must be completed within 12 months from the end of the assessment year in which the notice was issued.
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
A scrutiny assessment may be initiated when the Assessing Officer identifies inconsistencies, high-risk transactions, or data mismatches in a taxpayer's return. Common triggers include: Discrepancies between reported income and data from Form 26AS, AIS, or TIS.
As per section 2(11) of the GST ACT the term “assessment means determination of tax liabilities under this act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.
Reply on Show Cause Notice Under Section 130 issued by tax officer
1️⃣ GST Notice under Section 61 – Scrutiny of Returns
Procedure for Assessment Under GST
The GST officer reviews the application and approves provisional tax payment, usually after requiring a bond and surety. The officer may allow the taxpayer to pay tax based on an estimated value or rate until the final assessment is completed.
The notice of assessment for GST/HST will include the following (similar to a QST return): Breakdown of line items from your sales tax return. Payments made. Balance due or refund owing. Interest, either due to insufficient or late payment of instalments.
Rule 99 Scrutiny of returns
When a return is selected for scrutiny, the proper officer shall scrutinise the same as per section 61 based on information available to him. The discrepancies shall be intimated to the taxpayer via Form GST ASMT-10 and seek his explanation within 30 days of notice.
To avoid scrutiny, taxpayers must ensure consistency across all financial records and ITR data. Always verify that your income details match the figures in AIS, TIS, and Form 26AS before filing. Report all income sources, including savings account interest and dividends, and maintain proofs for every deduction claimed.
Time Limit for Adjudication under GST
The GST law sets deadlines for when orders must be passed: Section 73 (No fraud): Order within 3 years from the due date of the annual return. Section 74 (Fraud cases): Order within 5 years. Once you file your reply, the officer should ideally pass an order within 3 months.
For tax evasion without fraudulent intent, a penalty of 10% of the tax due, subject to a minimum of Rs. 10,000, is imposed; with fraudulent intent, the penalty equals the tax evaded, with a minimum of Rs. 10,000, and may include imprisonment based on the tax amount involved.
A GST notice is an official communication issued by the tax authorities under the Goods and Services Tax (GST) regime in India. It is sent to taxpayers for various reasons related to GST compliance, such as discrepancies in GST returns, delays in GST payment, or mismatches in input tax credit claims.
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 sub-section (1) and sub-section (3) of section 61 of the CGST Act.
While "adjudication" can describe different legal processes, three common types in dispute resolution are formal adjudication (court trials with strict rules), arbitration (binding decision by a neutral third party, often quicker), and informal adjudication/mediation (facilitated settlement with a non-binding outcome, focusing on agreement). In administrative law, they're often categorized by APA governance: Type A (formal APA), Type B (required evidentiary hearings, not APA), and Type C (no required hearings).
Section 61 - Scrutiny of Returns
The proper officer can scrutinize the GST return and related particulars furnished by the registered person to verify the correctness of the return. This is called a scrutiny assessment.
Adjudication under the CGST, Act, 2017
Section 2 (91) defines, “Proper Officer in relation to any function to be performed under this Act, means the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board”.