Scrutiny Guidelines for GST
The Central Board of Indirect
Taxes & Customs (CBIC) on Tuesday, 22 March 2022 issued
scrutiny guidelines for GST, for the first two years of the
new indirect tax regime, as part of a plan to plug leakages and shore up
collections.
The CBIC has shared an indicative
list of parameters, which suggested that there was special emphasis on entities
claiming input tax credit (ITC) from certain segments, along with those where
tax collected at source, such as for ecommerce. For the last couple of years,
tax authorities are keeping a close watch on ITC as they have come across
multiple cases of fraud and inclusion in the list of parameters points to
possible steps in future, in case widespread misuse is seen.
Almost five years after its
launch, the government is looking at scrutiny and tighter audit norms to ramp
up revenue generation from GST, along with a revamp of the rate structure for
which ministerial panels are at work.
The standard operating procedure
issued to field officers on Tuesday said that the Directorate General of
Analytics and Risk Management has been assigned the task to select the GSTINs
registered with central tax authorities, whose returns will be picked up for
scrutiny. The GST numbers will then be shared with the officers of the zone,
with strict timelines given to complete the process.
·
Relevant
statutory provisions
Ř Section 61. Scrutiny of
returns:
Ř Rule 99. Scrutiny of
returns:
·
Selection
of returns for scrutiny
·
Proper
officer for scrutiny of returns
·
Scrutiny
Schedule
·
Process
of scrutiny by the Proper Officer
·
Timelines
for scrutiny of returns
·
Reporting
and Monitoring
·
Annexure A:
Scrutiny Schedule
[CBIC Instruction No.
02/2022-GST dated 22 March 2022]
Subject: Standard Operating Procedure (SOP) for Scrutiny of
returns for FY 2017-18 and 2018-19.
Section 61 of the Central Goods and Services Tax Act,
2017 (hereinafter referred to as “the CGST Act”) read with rule 99 of Central
Goods and Services Tax Rules, 2017 (hereinafter referred to as “the CGST
Rules”) provides for scrutiny of returns and related particulars furnished by
the registered person. Till the time a Scrutiny Module for online scrutiny of
returns is made available on the CBIC-GST application, as an interim measure,
the following Standard Operating Procedure (SOP) is being issued by the Board
in order to ensure uniformity in selection/ identification of returns for
scrutiny, methodology of scrutiny of such returns and other related procedures.
2. Relevant statutory provisions
2.1 Section 61 of the
CGST Act, read with rule 99 of the CGST Rules, provides for scrutiny of
returns. The same are reproduced below for reference:
Section
61. 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.
(2) In case the explanation is found acceptable, the
registered person shall be informed accordingly and no further action shall be
taken in this regard.
(3) In case no satisfactory explanation is furnished
within a period of thirty days of being informed by the proper officer or such
further period as may be permitted by him or where the registered person, after
accepting the discrepancies, fails to take the corrective measure in his return
for the month in which the discrepancy is accepted, 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 or
section 74.”
Rule
99. Scrutiny of returns:
“(1) Where any return furnished by a registered person is
selected for scrutiny, the proper officer shall scrutinize the same in
accordance with the provisions of section 61 with reference to the information
available with him, and in case of any discrepancy, 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.
(2) The registered person may accept the discrepancy
mentioned in the notice issued under sub- rule (1), and pay the tax, interest
and any other amount arising from such discrepancy and inform the same or
furnish an explanation for the discrepancy in FORM GST ASMT-11 to the proper officer.
(3) Where the explanation furnished by the registered
person or the information submitted under sub-rule (2) is found to be
acceptable, the proper officer shall inform him accordingly in FORM GST ASMT-12.”
2.2 The
aforementioned provisions suggest that scrutiny of returns, inter-alia, entails
the following:
(a) Selection of returns furnished by a registered person
for scrutiny, preferably based on robust risk parameters.
(b) Scrutiny of the returns and related particulars
furnished by the registered person to verify the correctness of the return.
Information available with the proper officer in various returns and statements
furnished by the registered person and the data/details made available through various
sources like DGARM, ADVAIT, GSTN, E-Way Bill Portal, etc. may be relied upon
for this purpose.
(c) Informing the registered person of the discrepancies
noticed, if any, along with quantification of the amount of tax, interest and
any other amount payable in relation to such discrepancy and seeking his
explanation thereto.
(d) Where the registered person accepts the discrepancy
and pays the tax, interest and any other amount arising from such discrepancy
or where the explanation furnished by the registered person is found
acceptable, conclude the proceedings after informing the registered person.
(e) Where no satisfactory explanation is furnished by the
registered person or where the registered person, after accepting the
discrepancy, fails to pay the tax, interest and any other amount arising from
such discrepancy, initiate appropriate action including those under section 65
or section 66 or section 67, or determination of tax and other dues under
section 73 or section 74 of the CGST Act.
3. Selection of returns for scrutiny
3.1 Selection of returns for scrutiny is to be based on
specific risk parameters. For this purpose, the Directorate General of
Analytics and Risk Management (DGARM) has been assigned the task to select the
GSTINs registered with Central tax authorities, whose returns are to be
scrutinized, and to communicate the same to the field formations from time to
time through the DDM portal (to the nodal officer of the Commissionerate
concerned) for further action.
3.2 For convenience of field officers, DGARM would also
provide some relevant data (along with likely revenue implication) pertaining
to the returns to be scrutinized through the DDM portal. It may be noted that
the data provided by the DGARM is generated at a particular point of time which
may undergo change at the time of scrutiny of returns by the proper officer 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.
4. Proper
officer for scrutiny of returns
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. Accordingly, scrutiny of returns of a taxpayer may be conducted by
Superintendent of Central Tax in-charge of the jurisdictional range of the said
taxpayer.
5. Scrutiny Schedule
5.1 Once the list of GSTINs, whose returns have been
selected for scrutiny, is communicated to the field formations, the proper
officer, with the approval of the divisional Assistant / Deputy Commissioner,
shall finalize a scrutiny schedule. Such scrutiny schedule will specify
month-wise schedule for scrutiny in respect of all the GSTINs selected for
scrutiny. While preparing the scrutiny schedule, the scrutiny of the GSTINs,
which appear to be riskier based on the likely revenue implication indicated by
DGARM, may be prioritized. Such scrutiny schedules in respect of all the ranges
within the CGST Zone shall be reported to the Directorate General of Goods and
Services Tax (DGGST) by the concerned Zone, in the format enclosed as Annexure
A.
5.2 The proper officer shall conduct scrutiny of returns
pertaining to minimum of 3 GSTINs per month. Scrutiny of returns of one GSTIN
shall mean scrutiny of all returns pertaining to a financial year for which the
said GSTIN has been identified for scrutiny.
6.
Process of scrutiny by the Proper Officer
6.1 The Proper Officer shall scrutinize the returns and
related particulars furnished by the registered person to verify the
correctness of the returns. Information available with the proper officer on
the system in the form of various returns and statements furnished by the
registered person and the data/details made available through various sources
like DGARM, ADVAIT, GSTN, E-Way Bill Portal, etc. may be relied upon for this
purpose.
6.2 For convenience of proper officers, an indicative
list of parameters to be verified is enclosed as Annexure B. It may be noted
that the said list is only indicative, and not exhaustive. The proper officer
may also consider any other parameter, as he may deem fit, for the purpose of
scrutiny.
6.3 It may be noted that at this stage, the proper officer
is expected to rely upon the information available with him or with the
department. As far as possible, scrutiny of returns should have minimal
interface between the proper officer and the registered person and, there
should normally not be any need for seeking documents/ records from the
taxpayers before issuance of FORM GST ASMT-10.
6.4 The proper officer shall issue a notice to the
registered person in FORM GST ASMT-10 informing him of the discrepancies
noticed and seeking his explanation thereto. While issuing such notice, the
Proper Officer may, as far as possible, quantify the amount of tax, interest
and any other amount payable in relation to such discrepancies. It may also be
ensured that the discrepancies so communicated may, as far as possible, be
specific in nature and not vague or general. There may be cases where the
registered person may already have made additional payment of tax, cess, etc., after filing of the returns for the relevant
tax period, through FORM GST DRC-03. The payments thus made through FORM GST
DRC-03 may also be taken into consideration while communicating discrepancies
to the taxpayer in FORM GST ASMT-10.
6.5 For each GSTIN identified for scrutiny for a
financial year, the proper officer is required to scrutinize all the returns
pertaining to the corresponding Financial Year under consideration and a single
compiled notice in FORM GST ASMT-10 may be issued to the taxpayer for that
financial year.
6.6 The registered person may accept the discrepancy
mentioned in the notice issued in FORM GST ASMT-10, and pay the tax, interest
and any other amount arising from such discrepancy through FORM GST DRC-03 and
inform the same or may furnish an explanation for the discrepancy in FORM GST
ASMT-11 to the proper officer within the time period prescribed under rule 99
of CGST Rules.
6.7 Where the explanation furnished by the registered
person or the information submitted in respect of acceptance of discrepancy and
payment of dues is found to be acceptable by the Proper Officer, he shall
conclude the proceedings by informing the registered person in FORM GST
ASMT-12.
6.8 In case no satisfactory explanation is furnished by
the registered person in FORM GST ASMT-11 within a period of thirty days of
being informed by the proper officer or such further period as may be permitted
by him or where the registered person, after accepting the discrepancies, fails
to pay the tax, interest and any other amount arising from such discrepancies,
the proper officer, may proceed to determine the tax and other dues under
section 73 or section 74. Needless to mention, for proceeding under section 73
or section 74, monetary limits as specified in Circular No. 31/05/2018-GST
dated 9th February 2018 shall be adhered to. However, if the proper officer is
of the opinion that the matter needs to be pursued further through audit or
investigation to determine the correct liability of the said registered person,
then he may refer the matter to the jurisdictional Principal Commissioner /
Commissioner through the divisional Assistant / Deputy Commissioner, for the
decision whether the matter needs to be referred to Audit Commissionerate
or Anti-evasion Wing of the Commissionerate, as the
case may be.
7. Timelines for scrutiny of returns
7.1 Scrutiny of returns is to be conducted in a time
bound manner, so that necessary action to safeguard revenue may be taken up
expeditiously. In this regard, the following timelines may be observed by all
concerned:
|
S. No. |
Process/Event |
Timeline/ Frequency |
|
(i) |
Communication
of list of GSTINs selected for scrutiny (by DGARM to the nodal officer of the
Commissionerate concerned) |
From
time to time. |
|
(ii) |
Distribution
of the list of GSTINs selected for scrutiny by the nodal officer to the
proper officers concerned. |
Within
three working days of receipt of the list from DGARM. |
|
(iii) |
Finalization
of scrutiny schedule with the approval of the concerned Assistant/Deputy
Commissioner |
Within
seven working days of receipt of the details of the concerned GSTINs from the
nodal officer. |
|
(iv) |
Sharing
the scrutiny schedule by the zone with DGGST |
Within
thirty days of receipt of the details of the concerned GSTINs from DGARM. |
|
(v) |
Issuance
of notice by the proper officer for intimating discrepancies in FORM GST
ASMT-10, where required |
Within
the month, as mentioned in scrutiny schedule for scrutiny of the returns of
the said GSTIN. |
|
(vi) |
Reply
by the registered person in FORM GST ASMT-11 |
Within
a period of thirty days of being informed by the proper officer in FORM GST
ASMT-10 or such further period as may be permitted by the proper officer |
|
(vii) |
Issuance
of order in FORM GST ASMT-12 for acceptance of reply furnished by the
registered person, where applicable |
Within
thirty days from receipt of reply from the registered person in FORM GST
ASMT-11 |
|
(viii) |
Initiation
of appropriate action for determination of the tax and other dues under
section 73 or section 74, in cases where no reply is furnished by the
registered person |
Within
a period of fifteen days after completion of the period of thirty days of
issuance of notice in FORM GST ASMT-10 or such further period as permitted by
the proper officer |
|
(ix) |
Initiation
of appropriate action for determination of the tax and other dues under
section 73 or section 74, in cases where reply is furnished by the registered
person, but the same is not found acceptable by the proper officer |
Within
thirty days from receipt of reply from the registered person in FORM GST
ASMT-11 |
|
(x) |
Reference,
if any, to the Commissioner for decision regarding appropriate action under
section 65 or section 66 or section 67 |
Within
thirty days from receipt of reply from the registered person in FORM GST
ASMT-11 or within a period of forty-five days of issuance of FORM GST
ASMT-10, in case no explanation is furnished by the registered person. |
7.2 It may also be ensured while conducting scrutiny that
the requisite action for issuing notices/orders is taken well ahead of the time
limits as prescribed in section 73 or section 74 of the CGST Act, as the case
may be, in respect of a return identified for scrutiny for a financial year.
8.
Reporting and Monitoring
A Scrutiny Register shall be maintained by the proper
officer in respect of the GSTINs allotted for scrutiny, in the format detailed
in Annexure C. The progress of the scrutiny exercise as per the scrutiny
schedule shall be monitored by the jurisdictional Principal Commissioner/
Commissioner on monthly basis. Further, a Scrutiny Progress Report, in the
format detailed in Annexure D, shall be prepared by the proper officer at the
end of every month. The monthly Scrutiny Progress Report for each Commissionerate of the CGST Zone shall be compiled for each
month and forwarded to the Director General of Goods and Service Tax (DGGST) by
the Principal Chief Commissioner/Chief Commissioner of the concerned Zone by
10th day of the succeeding month. The DGGST, in turn, would present the
progress report to the Board, through the GST Policy Wing, by the 20th day of
the corresponding month.
9. Till the time scrutiny module is made available on the
CBIC-GST application/AIO for CBIC officers, the aforesaid interim procedure for
scrutiny of returns may be conducted on manual basis. Any communication with
the taxpayer for the purpose of scrutiny shall be made with the use of DIN as
per the guidelines mentioned in the Circular No. 122/41/2019-GST dated 5th
November 2019.
10. This SOP is envisaged to enable the department to
leverage technology and risk-based tools to encourage self-compliance and to conduct
scrutiny of returns with minimal interaction with the registered persons. All
Principal Chief Commissioners (PCCs)/ Chief Commissioners (CCs) are requested
to closely monitor timely scrutiny of returns of the identified GSTINs within
their jurisdictions.
11. Difficulties, if any, in implementation of these
instructions may be informed to the Board (gst-
cbec@gov.in).
CBIC-20006/4/2022-GST
Annexure A
SCRUTINY SCHEDULE
(Refer Para 5.1)
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ZCDR Code |
Financial Year |
GSTIN |
Month
in which ASMT-10 is proposed
to be issued |
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