The Central Board of Excise and Customs (CBEC or the Board) vide Circular No. 185/4/2015-ST dated June 30, 2015 had laid down the procedure for carrying out detailed scrutiny of Service Tax Returns, to be followed by the Revenue with effect from August 1, 2015.
Now, on similar line, the Board has now issued instructions/ guidelines on detailed scrutiny of Central Excise Returns vide Circular No. 1004/11/2015-CX dated July 21, 2015 (the Circular)
In terms of the Circular, Return scrutiny is the first line of verification carried out as soon as the tax return is submitted by the assessee. A Return scrutiny process consists of two parts viz. Preliminary scrutiny (covers all the Returns filed online) and Detailed scrutiny (covers few Returns selected on the basis of identified risk parameters).
Gist of the guidelines for detailed scrutiny:
We are summarising herewith the gist of the guidelines issued vide the Circular for ease of understanding:
- Detailed scrutiny of a minimum of 2% and maximum of 5% of the total Returns received in a month shall be mandatorily performed by the proper officer;
- Selection of assessees by the Commissionerates for detailed scrutiny shall be based on Risk score and procedure for using it, as forwarded by DG (Audit) vide letter F. No. 381/20/2015 dated May 18, 2015;
- Chief Commissioners and Commissioners shall also have powers to manually select Returns for detailed scrutiny using such criteria as deemed fit to further complement the list of assessees selected on the basis of risk;
- Assessee selected for audit in a given financial year shall not be selected for detailed scrutiny;
- Once the Return of an assessee has been selected for detailed scrutiny, it should not be selected again for the next 12 months for detailed scrutiny;
- Most recent Return filed by that assessee should be used for conducting the detailed scrutiny;
- During the course of detailed scrutiny, the documents and records of assessees, where ever necessary, may be called for verification by proper officer;
- The ratio of Returns for Service Tax & Central Excise to be scrutinised in a composite range shall be in the ratio of the number of assessees registered as Service Tax and Central Excise assessees respectively.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Email: firstname.lastname@example.org)