Explore the simplified Standard Operating Procedure (SOP) for the scrutiny of GST returns from FY 2019-20 onwards. Learn about selection, preparation, and the response process for effective compliance.
The DG Systems has recently implemented a Scrutiny Module on the CBIC ACES-GST application for online scrutiny of GST returns. The functionality provides for the detailed workflow for scrutiny of returns as per Section 61 read with Rule 99 of the GST Act. Now, the government has come up with latest Standard Operating Procedure for Scrutiny of Returns for FY 2019-20 onwards on 26th May 2023. I have summarized the SOP for easy understanding of the readers as follows: –
Selection of returns for scrutiny and communication:
1. Directorate General of Analytics and Risk Management (DGARM) identifies risk parameters and selects GSTINs for scrutiny.
2. DGARM provides the details of selected GSTINs and risk parameters on the scrutiny dashboard of the proper officer on ACES-GST application.
3. The proper officer relies on the latest available data and identifies the GSTINs for scrutiny. (The data made available on the dashboard shall be generated at a particular point of time for calculation of risk parameters, this data may undergo change at the time of scrutiny of returns, due to subsequent compliances carried out by the taxpayer or by the suppliers of the taxpayer. The proper officer shall, therefore, rely upon the latest available data.)
Preparation of Scrutiny Schedule:
1. The proper officer, with the approval of the divisional Assistant/Deputy Commissioner, finalizes a scrutiny schedule specifying month-wise scrutiny for all selected GSTINs. The proper officer shall conduct scrutiny of returns pertaining to minimum of 4 GSTINs per month.
2. Riskier GSTINs with higher revenue implications are prioritized.
3. The Principal Commissioner/Commissioner monitors and ensures adherence to the scrutiny schedule.
Process of scrutiny by the Proper Officer:
1. The Proper Officer verifies the correctness of the returns and related particulars furnished by registered persons by relying on information available on the system, including returns and statements, and data from various sources.
2. Details of risk parameters and discrepancies for selected GSTINs are provided on the scrutiny dashboard, along with the likely revenue implication.
3. The scrutiny should have minimal interaction between the Proper Officer and the registered person, and seeking additional documents or records should be avoided before issuing FORM GST ASMT-10.
4. The Proper Officer issues a notice (FORM GST ASMT-10) through the scrutiny functionality on ACES-GST application, communicating the discrepancies noticed and requesting an explanation from the registered person. Payments made through FORM DRC-03 are also considered while communicating discrepancies.
5. The notice is sent to the registered person via the common portal, eliminating the need for separate manual communication. The discrepancies so communicated should, as far as possible, be specific in nature and not vague or general. The proper officer shall mention the parameter-wise details of the discrepancies noticed by him in FORM GST ASMT-10 and shall also upload the worksheets and supporting document(s)/ annexures, if any.
6. For each GSTIN selected for scrutiny, all returns for the corresponding financial year are scrutinized, and a compiled notice (FORM GST ASMT-10) is issued.
7. The registered person can accept the discrepancies and make the necessary payments or provide an explanation (FORM GST ASMT-11) within the prescribed time period.
8. The registered person’s response in FORM GST ASMT-11 is made available to the Proper Officer on the scrutiny dashboard. If the explanation or payment is acceptable, the proceedings are concluded by informing the registered person through FORM GST ASMT-12.
9. If no satisfactory explanation is provided within the specified time or if the registered person fails to pay the dues after accepting the discrepancies, the Proper Officer may initiate proceedings under section 73 or section 74 of the CGST Act, adhering to the monetary limits specified in Circular No. 31/05/2018-GST.
10. If further audit or investigation is deemed necessary to determine the correct liability, the Proper Officer may seek approval from the jurisdictional Principal Commissioner/Commissioner and refer the matter to the Audit Commissionerate or anti-evasion wing, with the uploaded copy of the approval.
Response from Registered Person:
1. Registered persons receive notice in FORM GST ASMT-10 on the common portal and have the option to accept discrepancies or provide explanations.
2. Acceptance of discrepancies can be accompanied by payment of tax, interest, and any other amount through FORM DRC-03.
3. Registered persons furnish explanations or responses in FORM GST ASMT-11 within the prescribed time period.
Conclusion of Proceedings:
1. The proper officer reviews the reply furnished by the registered person in FORM GST ASMT-11.
2. If the explanation or information is acceptable, the proper officer concludes the proceedings by informing the registered person in FORM GST ASMT-12 through the scrutiny functionality on ACES-GST application.
3. If no satisfactory explanation is furnished or the registered person fails to pay dues, the proper officer may initiate proceedings under section 73 or section 74 of the CGST Act.
4. Monetary limits specified in Circular No. 31/05/2018-GST dated 9th February 2018 should be followed for such proceedings.
5. If further audit or investigation is required, the proper officer seeks approval from the jurisdictional Principal Commissioner/Commissioner through the divisional Assistant/Deputy Commissioner.
Timelines for scrutiny of returns: A summarized timeline for completion of the proceedings has been provided below: –
1. Start Date: Communication of GSTINs by DGARM.
2. Start Date + 7 days: Finalization of scrutiny schedule.
3. Start Date + Notice Month*: Issuance of FORM GST ASMT-10.
*Month, as mentioned in the scrutiny schedule for scrutiny of the said GSTIN
4. Start Date + Notice Month + 30 days (+ Further time as allowed by Proper Officer): Reply by the registered person in FORM GST ASMT-11.
5. Start Date + Notice Month + 30 days + 30 days: Drop proceeding Order in FORM GST ASMT-12, where applicable.
6. Start Date + Notice Month + 30 days + 30 days + 15 days: Initiation proceedings under section 73 or section 74, in cases where no reply is furnished by the registered person OR Start Date + Notice Month +30 days + 30 days + 30 days: Initiation proceedings under section 73 or section 74, in cases where the reply not found acceptable by the proper officer.
7. Start Date + Notice Month +30 days + 30 days + 30 days + 30 days: Reference, if any, to the Audit Commissionerate or the anti-evasion wing for action, under section 65 or section 66 or section 67, as the case may be.
Source- Instruction No. 02/2023-GST Dated: 26/05/2023
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(Disclaimer: This article is for general information purposes only and does not constitute legal advice. The author is not a lawyer and does not provide professional legal counsel. Laws vary by jurisdiction, and the content may not be up to date. No attorney-client relationship is formed by reading this article. The author and publisher are not liable for any reliance on the information. Seek legal advice from a qualified attorney for specific legal concerns. External links are provided (if any) for convenience, and their content is not endorsed. Consult a legal professional for accurate and updated information.)
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