MANNER OF SCRUTINY OF GST RETURNS

Section 61 of CGST Act, 2017 contains the provisions of scrutiny of GST returns which empowers proper officer to scrutinize the return and related particulars furnished by the taxable person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in a manner as may be prescribed. Rule 99 of CGST Rules, 2017 provides for rules relating to scrutiny of returns and manner of conducting the scrutiny along with forms ASMT-10, ASMT-11 and ASMT-12.

Scrutiny when return not filed

As per the scheme of section 61 of CGST Act, 2017, ‘Scrutiny’ is conducted of the return filed. The return becomes the subject matter of scrutiny. It implies that if the taxpayer has not filed the return or is not registered with the tax authorities which enables him to file the return, scrutiny of return cannot take place.

Filing of return is a pre-requisite for scrutiny of return. ‘No return, no scrutiny’ is the principle of section 61 of CGST Act, 2017.

The cases of non-filing of return are covered under section 62 of CGST Act, 2017, which enables the proper officer to carry out the best judgment assessment.

Section 61 also does not authorize the proper officer to issue a notice for filing of return.

Time-barring of Scrutiny of GST Returns

Under the provisions of Section 73(10) of CGST Act, the Proper Officer shall issue the order under sub-section (9) within three years from the due date Tor furnishing of annual return for the financial year to which the lax not paid or short paid or input tax credit wrongly availed or utilized relates to or within three years from the date of erroneous refund. The provisions of scrutiny returns are specified under Section 61 of CGST Act, 2017 and Rule 99 of CGST Rules, 2017.

The whole process of scrutiny of return under section 61 and rule 99 of CGST Act takes around 5 to 6 months. Hence, all Ward Incharges /Proper Officers have been advised to ensure timely issuance of order under section 73(9) for the scrutiny of returns for periods as mentioned in the CBIC vide Notification No. 9/2023 Central Tax dated 31.03.2023.

Time limit specified under section 73(10) for issuance of order under section 73(9) of CGST Act, 2017 for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized for any reason other than reason of fraud or any willful misstatement or suppression of facts to evade tax relating to the period has been extended as specified below:

Online Scrutiny of Return

Since the entire system of GST is online, scrutiny of return is also done online right from selection, issuance of notice, reply, payment etc. Nothing in scrutiny is done offline. Even where some documents are submitted offline, Proper Officer is required to upload the same on the system under the ‘reference tab’ available on the system.

Time limit for Reply to Notice

The notice of discrepancy issued by proper office in respect of scrutiny of returns has to be replied within such time not exceeding 30 days from date of service of notice or such further period as may be permitted by proper officer.

Rectification of return after Scrutiny

Section 39(9) of the CGST Act, 2017 dealing with furnishing of returns provides that returns can be rectified in relation to omission or incorrect particulars upto 30thday of November following the financial year or date of filing annual return, whichever is earlier in cases other than as a result of scrutiny, audit, inspection or any enforcement activity by the tax authorities.

Sub-section (3) of Section 61 specifically provides that assesse can take corrective measures in the returns, after accepting the discrepancy in the return, for the month in which such discrepancy is accepted. Going by section 61, it can be inferred that the time limit for rectification as per section 39(9) may not apply in cases of scrutiny as there is no reference of section 39 in the provisions of section 61. Further, the scrutiny of returns may not take place within the period stipulated in section 39(9).

Applicable Forms

According to Rule 99 of CGST Rules, 2017, following forms are required to be used for various purposes and are to be filed online.