Introduction:

Every GST registered taxpayer must file at least one or more designated GST returns on time. On filing, if there are any inconsistencies or errors in the information declared, the tax officers will conduct the scrutiny of these GST returns.

Under This GST officer will thoroughly check the GST return of a particular taxpayer based on certain risk parameters, to verify its correctness. If he finds any errors, he will issue a scrutiny notice to the registered taxpayer demanding an explanation.

The main objective behind a scrutiny assessment is to verify the correctness of details submitted in GST returns. There are risk parameters pre-defined for a tax officer to decide whether scrutiny notice needs to be issued.

What is the Automated Return Scrutiny Module?

The GST Network has launched the automated return scrutiny module in May 2023 from FY 2019-20 onwards. The automated return scrutiny module is integrated into the ACES-GST backend application to identify discrepancies and risks in the GST returns.

The objective of automated return scrutiny is to enhance tax compliance and reduce manual intervention. It is a verification process that enables central tax officers to scrutinize GST returns.

How will the Automated Return Scrutiny Module Work?

• Through this module, any discrepancies due to risks associated with a GST return will be flagged and an automated scrutiny notice will be sent out to the taxpayer in Form ASMT-10.
• These Discrepancies are also Displayed to the Taxpayers and, they are provided with workflow to interact with the taxpayer through GST Common Portal.
• Previously, Form ASMT-10 used to be sent out on the GST portal after tax officers manually picked up GST returns for scrutiny. Now, the GST portal will automatically send out Form ASMT-10 to non-compliant taxpayers detected by the system and then send out alerts to the GST officers.

Contents Of ASMT-10

How will automated return scrutiny impact GST taxpayers?

• Automated return scrutiny will make taxpayers more prone to receiving scrutiny and demand notices from the GSTN as every minute error will now be detected by the system. Earlier, it was up to the discretion of the tax officer to send out a notice.
• Now, with automated scrutiny and automated notices to taxpayers, all taxpayers that have mismatches in their returns that exceed the tolerance limits imposed by the GSTN could receive a scrutiny notice.
• Taxpayers must now give utmost importance to regular reconciliations of data sets to avoid discrepancies before the periodic returns are filed.
• Taxpayers will also need to have the documentation and evidence at hand pertaining to the current year as well as the past four years and a proper audit trail maintained to respond to these notices.
• Hence it is crucial that taxpayers act before filing returns to avoid coming under the radar of the automated scrutiny system.

Checklist for tax filers to avoid automated return scrutiny:

Ensure that the following checklist is always followed while filing GST returns-

• Difference Between GSTR1 and GSTR 3B:

The tax liability in Tables 3.1(a) and (b) of GSTR-3B must match with tax liability in Tables 4,5,6,7A (1),7B (1),11A and 11B of GSTR-1 (net of amendments in Tables 9,10, and 11(II)).

• Reverse Charge Mechanism:

Reporting and paying in cash the exact tax liability under the reverse charge mechanism using Tables 3.1(d) for tax liability and 4(A)(2) and 4(A)(3) for ITC claimed on it in GSTR-3B. Ensure that the value in GSTR-3B is more than the eligible ITC in Tables 3,4,5, and 6 of GSTR-2A.

• Matching Of 3B With 2A:

ITC claimed in Table 4(A)(4) of GSTR-3B must match with amounts marked as eligible ITC in Table 7 of GSTR-2A (net of amendments in Table 8).

• Supplier GSTR-3B not filed:

The GSTR-3B filing status of respective vendors must not be ‘No’ while claiming ITC of such invoice or debit note in the GST returns, despite it appearing in the GSTR-2A.

• ITC Claimed afterwards:

Do not claim such ITC if the relevant period’s GSTR-3B is filed after the last date allowed under Section 16(4) of the CGST Act, i.e., 30th November of the year following the financial year in which such invoice/debit note is raised or date of filing annual returns, whichever is earlier.

• ITC On Imports:

ITC on import of goods in Table 4(A)(1) of GSTR-3B must match with amounts in Tables 10 and 11 of GSTR-2A and data on ICEGATE.

• Reversal Of ITC:

Adhere to CGST Rules 42 and 43 for accurate reversals of ITC in Table 4(B) of GSTR-3B.

• Interest/Late Fees:

Do not miss computing and making late fee/interest payments as per Sections 47 and 50 of the CGST Act wherever return filing/tax payment is delayed.

• Reconciliation:

Reconcile the e-invoices from the IRP vis à vis the draft GSTR-1 and sales register to not miss out on e-invoicing and invoice reporting in returns.

Actions available for taxpayers subjected to scrutiny:

• The taxpayers receiving the notice in Form ASMT-10 must submit a reply, whether or not they agree to the demand. They should reply in form ASMT-11 within thirty days of being informed in ASMT-10 or if the officer allows.
• All documents or statements must be submitted as softcopies on the relevant portal. The taxpayers may accept the difference and pay tax, interest or dues while replying in ASMT-11 within the above time limit.
• They can make tax payments using DRC-03. The officer will verify and may issue the order to drop proceedings in form ASMT-12 if the reply is found satisfactory.
• On failure of reply or the reply sent is found unsatisfactory by the officer, they may initiate proceedings by sending a show cause notice under Sections 73/74, as the case may be or may also consider audit/investigations after seeking necessary permissions.