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As we all know that, Goods and Service Tax (GST) is the consumption based tax and self-assessment based system i.e. the GST law empowers taxpayers to self-assessed the CGST, SGST and IGST liability and pay the same to the government exchequer. In other words, it could be said that a trust has been placed, by the law makers, on the taxable person i.e. a taxable has given a right to the taxpayer to assessed his tax liability and discharge the same.

Imposing trust on the taxpayer has two implications- either they pay the tax correctly i.e. rational taxpayers or short paid or not paid the tax i.e. irrational taxpayers which lead to tax evasion.

In order to check the accuracy of the calculation of tax liability, to mitigate tax evasion, to prevent the genuine taxpayers over tax evaders, the officers has keep an eye over the taxpayers. Here in this article, the author will elaborate the various sections which empower the officers to further assessed the self- assessed tax and to knock the door anytime along with issues arises and action taken against the same.

Two important Points:

√ Sub section (11) of section 2 of CGST Act, 2017 define the term “Assessment means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.

√ As per section 59 of the CGST Act, 2017 every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.

Section 61- Scrutiny of Returns:

Section 61 of the Central Goods and Service tax, 2017 read with Rule 99 of the Central goods and Service tax Rules 2017 provides for the scrutiny of returns. The Relevant Provisions are:

“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.

Notice of Scrutiny of Return:

  • As per Rule 99, in case of any discrepancies, he shall issue a notice to the said person in FORM GST ASMT-10 informing him of such discrepancy and seeking his explanation thereto within such time, not exceeding thirty days from the date of service of the notice or such further period as may be permitted by him and also, where possible, quantifying the amount of tax, interest and any other amount payable in relation to such discrepancy.
  • The registered persons in FORM GST ASMT-11 either accept the discrepancies and pay the tax or furnish explanation against such notice. In case of satisfactory explanation, the proper officer shall inform accordingly in FORM GST ASMT-12.
  • However, in case no explanation is furnished or the explanation furnished is not found satisfactorily, the proper officer may initiate appropriate action including those under section 65 or section 66 or section 67, or proceed to determine the tax and other dues under Section 73/74.


Scrutiny of documents viz. Ledger accounts, return of tax, compliances etc. is nothing but a strong compliances verification procedure or mechanism. In case of scrutiny of return, the purpose of the proper officer is to ensure completeness of the information furnished in the return or he may verify-

  • Whether the Outward supply has escaped; or
  • Outward supply has under assessed; or
  • Ineligible Credit has been availed or utilised; or
  • Correct rate of tax has been used for self-assessment; or
  • Ineligible exemption has been taken; or
  • In case of late filing of return, is interest u/s 50 has been paid etc.
  • Timely submission of returns and identification of non-filers or stop filers

Current issues and action taken by the officers: The main issue that arose during the scrutiny of return till now is- (a) Mismatch of export invoice in GSTR-1 vis-à–vis GSTR-3B ; (b) Interest on delayed payment of tax, whether on net liability or gross liability (debated and controversial one); (c) difference in GSTR-2A and GSTR-3B.

  • Mismatch of Export invoice in GSTR-1 vis-à-vis GSTR-3B: Due to mismatch in Table 6A of the GSTR 1 and Table 3.1(b) of GSTR-3B, there has been non-processing of invoices of GSTR 1 pertaining to the export of services with &/or without payment of IGST by the GST System, and non- transmission of validated invoices to ICEGATE for refund of IGST paid on exports of goods/service. To prevent the same, the GST officials seek clarification form the registered person and also CBIC vide Circular No. 05/2018- Custom dated 23-02-2018 provides for alternative measures for successful processing of refund claims.
  • Interest on delayed payment of Tax: In case of filing of return after the due date, Whether interest has to be paid on Gross tax liability or net tax liability, this is the most controversial and debatable issue. The GST officers verified the returns filed by the registered persons and have started asking the registered persons to pay Interest on gross liability on such delayed payment of tax.

Action taken (Wrongful):

√  Issued letters calculating the delays in no. of days in delay payment of tax and calculation of interest on gross tax liability i.e. without considering the Input Tax Credit

√ The Central Board of Indirect Taxes & Custom (CBIC) has asked GST officials to collect interest of nearly INR 46,000/- crore on account of delayed payment of GST i.e. Special Secretary and Member in the Board, in a letter to Principal Chief Commissioner and Chief Commissioner, said that according to the law, the taxpayer has to assess and pay interest on delayed payment of GST.

√ Issuance of notice in FORM DRC-01 believing that to be a show cause notice u/s 73/74 of the Central Goods and Service tax Act 2017.

  • Difference in GSTR-2A and GSTR-3B:

√ Insertion of Rule 36(4): Mismatch of Input tax credit as per GSTR-2A (auto-populated) and GSTR-3B is the never ending issue. To mitigate the same to the lower extent, CBIC vide Notification No. 49/2019-CT dated 09-10-2019 has inserted Rule 36(4). The Rule States that “Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 10 percent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37”.

√ Levy of Late fees on delayed filing of GSTR-1: The late fees for delay filing of Outward Supply i.e. GSTR-1 from December 2019 applicable.

Section 62- Assessment of Non-filers of returns

Where a registered person fails to furnish the return under section 39 or section 45, even after the service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said person to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order in FORM GST ASMT-13 and a summary thereof shall be uploaded electronically in FORM GST DRC-07 [Rule 100(1) of CGST Rules 2017] within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates

Where the registered person furnishes a valid return within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue.

Note: Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall be issued requiring him to furnish such return within fifteen days in such form and manner as may be prescribed [Section 46].

Action taken by the GST officers:

> Cancellation of Registration: As per section 29 of the CGST Act 2017, the proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where (a) a person paying tax under section 10 has not furnished returns for three consecutive tax periods; or (b) any registered person, other than a person specified in clause (b), has not furnished returns for a continuous period of six months; or

> Standard Operating Procedure: In the 38th Council meeting, one of the recommendations was to set a Standard Operating Procedure (SOP) for tax officer in respect of action to be taken in cases of non-filing of GST Return u/s 39 or 45. In order to give effect to the above recommendation, CBIC vide Circular No. 129/48/2019 dated 24-12-2019 has issued Standard operating procedure to be followed in case of non-furnishing of GST return.

> Blocking of Eway Bill- As per Rule 138E of the CGST Rules 2017, if the tax payers have not filed the latest two successive month returns on the GST Common Portal, then these tax payers will be blocked for the generation of the e-way bills as per the rule. The E-way Bill system will communicate with the GST Common Portal to find out the filing details of the taxpayers.

Section 63: Assessment of Unregistered Person

where a taxable person fails to obtain registration even though liable to do so or whose registration has been cancelled under sub-section (2) of section 29 but who was liable to pay tax, the proper officer issue a notice in FORM GST ASMT-14 containing the grounds and also serve a summary thereof electronically in FORM GST DRC-01 and after allowing a period of fifteen days-time, the proper officer may proceed to assess the tax liability of such taxable person to the best of his judgment for the relevant tax periods and pass an order in FORM GST ASMT-15 and a summary thereof in FORM GST DRC-07 within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates after providing an opportunity of being heard.

Section 64: Summary Assessment in Certain Special cases:

The proper officer may, on any evidence (not a mere change in opinion) showing a tax liability of a person coming to his notice, with the previous permission of Additional Commissioner or Joint Commissioner, proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order in FORM GST ASMT-16, if he has sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue.

Provided that where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be assessed and liable to pay tax and any other amount due under this section

On an application made by the taxable person within thirty days from the date of receipt of order passed under sub-section (1) or on his own motion, if the Additional Commissioner or Joint Commissioner considers that such order is erroneous, he may withdraw such order in FORM GST ASMT-18 and follow the procedure laid down in section 73 or section 74.

Section 70: Power to summon persons to give evidence and produce documents

The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908. Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial proceedings” within the meaning of section 193 and section 228 of the Indian Penal Code.

Section 67 to Section 69 of the Central goods & Service Tax Act 2017 covers the Provision of Investigation, search & seizure, which is- where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that, a taxable person has suppressed any transaction, has escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax, he may authorise any officer to inspect, search and seize. Section 71 empowers the officer to access the business premises of the taxpayer.


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July 2024