GST scrutiny under Section 61 of the CGST Act is a verification process where tax officers review filed returns (GSTR-1, 3B, 2A/2B) for accuracy against risk parameters. If discrepancies are found, a notice (Form GST ASMT-10) is issued, requiring the taxpayer to reply within 30 days. Satisfactory replies drop the proceedings.
Scrutiny of returns.-
(1) The proper officer may scrutinize 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.
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.
This is a detailed assessment and is referred to as scrutiny assessment. At this stage a detailed scrutiny of the return of income will be carried out is to confirm the correctness and genuineness of various claims, deductions, etc., made by the taxpayer in the return of income. Scope of assessment under section 143(3)
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.
This 3rd Edition of How to Handle GST – Notices, Scrutiny, Assessment, Adjudication & Appeals, authored by Rakesh Garg, LL. B., CA and Sandeep Garg, CMA, FCA, is a practical and analytical guide to the critical compliance and litigation aspects under the GST regime.
GST Audit : Audit under GST is the process of examination of records, returns and other documents maintained by a taxable person. The purpose is to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess the compliance with the provisions of GST.
1️⃣ GST Notice under Section 61 – Scrutiny of Returns
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.
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.
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.
While GST audits and GST assessments are related to evaluating GST compliance, their scope and objectives differ. A GST audit involves independently examining the taxpayer's records while tax authorities conduct a GST assessment.
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.
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.
Various types of returns filed under GST; Income tax audit report (i.e., Form 3CA or 3CD and Form 3CB);Cost audit report;Internal audit report etc. Cost audit report;Internal audit report etc. Tax invoices; bill of supply; debit notes; credit notes; receipt and payment vouchers; delivery challans etc.
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.
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.
This allows users to check the status of their GST registration application using the Application Reference Number (ARN). This service provides real-time updates on the progress and approval of the application.
In case, the applicant does not reply to the notice within the stipulated time or the Tax Official is not satisfied with the reply filed by the applicant, he may proceed further to issue Refund Rejection/ Sanction Order in Form GST RFD-06 for sanctioning/rejecting the amount of refund in whole or part.
Here are the top eight reasons why taxpayers may receive GST notices:
How to handle GST Notices, Scrutiny, Assessment and Adjudication
Reply on Show Cause Notice Under Section 130 issued by tax officer
Filing your GST/HST returns late or making mistakes in your filings can trigger an audit. Why It's a Trigger: Frequent errors may indicate poor financial management. The CRA may investigate whether errors were intentional to reduce tax liability.
The 7 steps in the audit process generally cover Planning, Risk Assessment, Internal Control Testing, Fieldwork/Evidence Collection, Reporting, and Follow-Up, focusing on a systematic review from initial engagement to ensuring corrective actions are taken for operational improvement. This framework ensures comprehensive evaluation, from understanding the client's business to delivering actionable insights and ensuring accountability for identified issues.
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)