Tax officers may conduct the scrutiny of GST Returns filed by GST registered taxpayer.

Scrutiny Assessment under GST

A GST officer can check the GST returns of a taxpayer based on certain parameters. If he finds any errors, he will issue a scrutiny notice to the registered taxpayer demanding an explanation. Only online assessment is done in this type of assessment.

The taxpayer can admit the differential tax demanded with interest if any calculated by GST officer and pay it and file the reply 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). GST officer can take further action 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.

Form ASMT- 10

1. A scrutiny notice is issued in Form ASMT-10 intimating discrepancies in GST return along with tax, interest and penalty if any.
2. Tax officer can send the notice via SMS or email to the taxpayer.
3. 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.

Form ASMT- 11

1. Before submitting the 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: 

• Agrees/admits the tax due as per the notice and had already paid it -Will declare the payment particulars while replying in ASMT-11, or
• Agrees/admits the tax due as per the notice, but yet to pay it – Will pay by either of the following options and thereafter reply in ASMT-11:
  • Pay tax in Form DRC-03
  • Furnish supply invoice/debit note/amended invoice/amended debit note in GSTR-1
  • Pays tax or reverse ITC while filing GSTR-3B

2. After submitting the 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.

Show-cause Notice if not submitting the Reply

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.