Blog No.69: Standard Operating Procedure for Scrutiny of Returns for FY 2019 – 20 Onwards   

Vide Instruction No 02/2023 dated 26.05.2023, it has been informed that scrutiny module has been made available on ACES-GST application by the Director’s General (DG) system, namely “Scrutiny of Returns”, for scrutiny of returns under section 61 of the CGST Act, 2017 pertaining to FY 2019-20 onwards. The functionality so developed will identify the GSTINs which are administratively assigned to Central Jurisdiction.

To know more, read in detail about the instruction below:

  1. Since the functionality has been made available online now, the earlier instruction No. 02/2022 issued for FY 2017-18 and 2018-19 continues to operate manually.
  2. The guidelines for verification issued vide Instruction No. 02/2022 GST shall stand modified to the extent given in present Instruction No. 02/2023 in respect of FY 2019-20 onwards.
  3. Selection of returns for the scrutiny and communication of the same to the field formations

Selection of returns will be done by the Directorate General of Analytics and Risk Management (DGARM) with the help of various risk parameters (like revenue implication). Further, selected GSTINs will be made available on scrutiny dashboard of the concerned proper officer.

  1. Scrutiny schedule

The scrutiny schedule for the selected GSTINs will be finalized by the proper officer with approval of the divisional Assistant/Deputy Commissioner. GSTINs having high risk may be marked on topmost priority. On a monthly basis, all returns (pertaining to financial year for which scrutiny has to be done) of at least 4 GSTINs shall be scrutinized. The Commissioner / Principal Commissioner of concerned Commissionerate will monitor and will ensure that the schedule identified in Scrutiny Schedule is adhered to by the officers under his jurisdiction.

  1. Process of scrutiny by the Proper Officer

5.1  Firstly, the Proper Officer will scrutinize the correctness of returns based on the details of risk parameters like amount of tax and discrepancies involved from the data available through various sources like DGARM, ADVAIT, GSTN, E-Way Bill Portal etc. and he may also consider other relevant parameter, as he may deem fit, for the purpose of scrutiny.

5.2  The proper officer is expected to rely only upon the information available with him on the records only.

5.3  While doing scrutiny of returns, there should be minimal interface between the proper officer and the registered person.

5.4  Before issuance of FORM GST ASMT-10, there should not be any need for seeking documents/ records from the registered person.

5.5  The proper officer shall issue a notice to the registered person in the FORM GST ASMT-10 through the scrutiny functionality on ACES-GST application. Further, there will be no need to send any manual communication notice in FORM GST ASMT-10 separately.

5.6 While issuing notice in Form GST ASMT-10, payments made by the taxpayer in Form GST DRC-03 shall also be considered.

5.7  The officer has to ensure that discrepancies communicated are specific in nature and are not vague or general. Further, he shall also upload worksheets or supporting documents/annexures, if any along with notice.

5.8  The explanation should be given within thirty days of being informed by the proper officer in the FORM GST ASMT-11. If reply is not satisfactory, then proceedings will be initiated within fifteen days after completion of thirty days of GST ASMT-10 under section 73 or section 74 of CGST ACT 2017, or the officer may also recommend the case for audit or investigation, as considered necessary.

5.9  In case reply is found satisfactory, then he shall conclude the proceedings by informing the registered person in FORM GST ASMT-12.

  1. Reporting and Monitoring

The details of action taken by the proper officer will be available in two MIS reports, namely “Monthly Scrutiny Progress Report” and “Scrutiny Register”. The former report displays summary information of the status of scrutiny of returns while latter report displays the GSTINs wise details.

  1. For the Financial Year 2019-20 onwards, the requirements for compiling and sending the “Monthly Scrutiny Progress Report” by the CGST zones to DGGST have been provided.
  2. However, for the Financial Year 2017-18 and 2018-19, the CGST zones will continue to send their reports to DGGST till the completion of scrutiny of returns for the respective financial years.
  3. Timeliness for scrutiny of returns

This process of scrutiny of returns should be in a time bound manner, so that cases could reach their logical conclusion and that too with efficiently and effectively, considering the same the following timelines has been drafted for the sake of all concerned.

   Paksh Remarks

  1. ‘Time Bound compliances’ have become a new tag for GST Law. Looking at the timelines prescribed in instruction, we reckon that the communications with department must be adhered to as per scheme of Law.
  2. This instruction r/w Instruction No. 02/2022 directs the Proper Officer to raise, rather confirm, demand on various controversial points without allowing any scope for cross-inquiry / compliance with Principle of National Justice. One being, demand in respect of ITC where the GSTIN allocated to vendor has been cancelled retrospectively i.e., a date prior to the date of Tax Invoice. Another being, demanding ITC i.r.o. those tax invoices whose GSTR-1 is filed by corresponding vendor after the due date u/s 16(4).
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