How to manage scrutiny notice from GST
In the recent days, many of the registered entities are receiving notices “ASMT-10” with respect to the returns filed in the earlier years. This article briefs about the ASMT-10, reasons for these notices and the procedure for replying to the same.
Risk parameters for scrutiny:
The following are the possible parameters which lead us to get picked for scrutiny by the department:
1. Difference in the tax liability on account of Outward supplies of GSTR-3B and GSTR-1.
2. Whether the registered person has paid interest liability in terms of section 50.
3. Whether the registered person has made reversals of ITC in accordance with provisions of rule 42 and rule 43 of the CGST Rules.
4. Whether GSTR-3B of a tax period is filed after the last date of availment of ITC in respect of any invoice / debit note as per section 16(4). In such cases, no ITC shall be availed in the return.
5. Ineligible ITC availed in respect of invoices / debit notes issued by the suppliers who have not filed their GSTR-3B returns for the relevant tax period.
6. Claim of ITC in respect of supplies from taxpayers whose registrations have been cancelled retrospectively.
7. Liability on account of outward supplies in Table 3.1(a) and 3.1(b) of FORM GSTR-3B should be verified with the Tax liability as declared in e-way bills.
8. ITC availed in respect of “Inward supplies from ISD” in Table 4(A)(4) of FORM GSTR-3B may be verified with Table 7 (along with the net effect of amendments thereof in Table 8) of FORM GSTR-2A.
9. Tax liability on account of “Inward supplies (liable to reverse charge)” as declared in GSTR-3B may be verified with ITC availed in GSTR-3B.
How to respond to ASMT-10:
Section 61 deals with the powers of the proper officer to scrutinize the returns. The proper officer can scrutinize the returns and the details furnished by the registered person and incase discrepancies are identified; he can inform the registered person to seek explanation.
If required action is not taken by the registered person within the stipulated time, then the proper officer can take action against the registered person u/s 65 or 66 or 67; or might proceed to determine tax as per section 73 or 74.
Section 65 deals with powers of the officer to conduct audit, Section 66 deals with Special audit and Section 67 deals with powers to Inspect, Search and Seize the place of business. Section 73 or 74 deals with determination of tax liability in case of deficiencies (or) fraud.
Now, the question arises as to what does corrective measures mean? How can a register person make changes in the returns furnished earlier if in case the person accepts the discrepancies ordered as per ASMT-10?
There are two practices followed by the registered persons to make corrections in the returns furnished.
- Payment under DRC-03: If in case the discrepancies identified led to short payment of tax, the registered person can make payment through DRC-03 in GST portal. DRC-03 is generally used by the registered person to make payment for taxes voluntarily or to respond for SCN or if the time limit to make changes in the returns furnished expires.
- Corrective measures in the upcoming return: As per sub section 3 of this section, the registered person can take the corrective measures in his return for the month in which the discrepancies are accepted. Corrective measures meant to be rectification in the monthly returns liable to file.
Time limit for responding to ASMT-10:
The registered person has to respond to the ASMT-10 by submitting FORM ASMT-11 within 30 days of receipt of notice. If the registered person accepts the discrepancies and makes the payment through FORM DRC-03, then he can submit the same along with the FORM ASMT-11.
After the submission of response and annexures for the discrepancies by the registered person, if the proper officer founds them as acceptable, the officer should conclude the proceedings by issuing FORM ASMT-12 within 30 days of receipt of response from registered person.