TaxTMI 
TaxTMI 
TaxTMI 
SCRUTINY OF GOODS AND SERVICES TAX RETURNS
X X X X Extracts X X X X
X X X X Extracts X X X X
....CRUTINY OF GOODS AND SERVICES TAX RETURNS<br>By: - Dr. Sanjiv Agarwal <br>Goods and Services Tax - GST<br>Dated:- 16-12-2025<br>The scrutiny of returns implies verification of the genuineness of the GST returns furnished by the registered persons by the proper officer to determine its correctness. The term 'scrutiny assessment' has been explained in Advanced Law Lexicon by P. Ramanatha Aiyar in following terms: "Scrutiny assessment - It arises where an assessing officer considers it necessary to ensure that the assessee has not (a) understated his income, (b) returned excessive loss, or (c) underpaid the tax. He may serve a notice on the assessee requiring him to appear on the specified date or to furnish any documents/evidence in support....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of his return. There are various factors guiding the selection of a case for scrutiny. Some of these are: (a) continuous losses from year to year, (b) low profitability declared compared to the general profitability in similar business, (c) extraordinary expenditure booked, and (d) huge private borrowings made." Gist of provisions of Section 61 of CGST Act, 2017 - At a Glance * The proper officer can scrutinize the return to verify its correctness. * It is a non-compulsory pre-adjudication process. * It is not mandatory for the officer to scrutinize return. * Scrutiny of returns is not a legal or judicial proceeding, i.e., no order can be passed. * The officer will ask for explanations on discrepancies noticed. * The proper o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fficer may issue SCN, if required. * Department can select returns for verification - Can seek explanation for discrepancies detected or observed. * GST officers can scrutinize a GST return and related particulars furnished by the registered person to verify the correctness of the return. * In case of any discrepancies noticed by the Officer, he/she would inform the same to the registered person and seek his explanation on the same. * On the basis of the explanations received from the registered person, the Officer can take following actions: * If the explanation is satisfactory, Proper Officer will inform about the same to the registered person and no further action shall be taken. * If the explanation provided is not satisfact....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ory or the registered person has failed to take corrective measures after accepting the discrepancies, Proper Officer shall initiate appropriate action, viz: * Conducting audit of registered person, * Conducting special audit, * Inspecting and searching the place of business of registered person, or * Initiating demand and recovery provisions. How Scrutiny is done? The scrutiny of returns could be manual, desk review or an online evaluation. The scrutiny of returns becomes important in an era of self-assessment where the need for a strong compliance mechanism cannot be over emphasized. The person who does the scrutiny is called scrutineer and the process is called scrutiny or to scrutinize When any return is selected for scrutiny....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the proper officer verifies the information with reference to the information available with him. In case of observance of any discrepancy, to issue notice to the taxable person and seek his explanation to the discrepancy observed by him. There could be following different scenarios in response to such notice received from proper officer, viz, (a) The taxable person accepts the discrepancy, deposits the shortfall in the payment of tax along with interest thereon and informs to proper officer. (b) The taxable person submits the explanation to the points raised by proper officer in his reply, the explanation is found to be acceptable to proper officer, and the prop....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er officer closes the matter and informs the taxable person. (c) The explanation is not found to be acceptable or after accepting the discrepancy, the taxable person fails to deposit the tax with interest, the proper officer takes the following actions. * Orders for audit by tax authorities - section 65 of the CGST Act, 2017 * Orders for special audit - section 66 of the CGST Act, 2017 * Initiates inspection, search or seizure - section 67 of the CGST Act, 2017 * Determination of tax not paid or short paid - section 73 of the CGST Act, 2017 (upto 31.03.2024) * Determination of tax not paid or short paid by reason of fraud or wilful misstatement - section 74 of the CGST Act, 2017 (upto 31.03.20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....24) * Section 74A of the CGST Act, 2017 (w.e.f. 01.04.2024) It may be noted that scrutiny under section 61 is not a substitute for any assessment or adjudication under section 73, 74 or 74A. It does not give the authority to the proper officer to undertake assessment proceedings. The proper officer can only seek explanation from the assessee on any discrepancies pointed out. To facilitate such explanation, assesse may submit any explanation / information /documentary evidences to substantiate the defence against the discrepancy pointed out. The proper officer cannot seek or call for any additionaldocuments but can take shelter of initiating proceedings of audit / adjudication. Practice tips on Scrutiny of Returns It is desirable for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e taxpayer to note and follow the following tips while handling scrutiny of returns: * All the returns should be filed timely, completely and correctly * It should be ensured that the figures in the returns are correct and filled in the appropriate column. * If the communication is received from the proper officer for initiating the scrutiny, the same should be attended to diligently. * Assessee should verify whether the notice or scrutiny is within time limitation. * Notice for scrutiny as well as reply to scrutiny can be done online and in case of manual scrutiny, reply can be submitted manually. * The information and records sought for should be furnished timely. If it is felt that it may take some time, a written communicati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on must be sent seeking extension of time. * Discrepancies as advised by the proper officer must be attended to and replied / explained with documentary evidences. * Such explanation should be furnished within time period allowed i.e., 30 days. * In case, assessee feels that personal hearing is required for explaining the discrepancies, it can be requested. * The accepted discrepancies should be rectified and corrective measure taken in the return for the month in which discrepancy is accepted. * ASMT-10 should be replied in prescribed form ASMT-11 and if any. payment is being made, it can be made through form GST DRC-03, along with interest. * Assessee should regularly check the status of scrutiny of returns on the portal. * ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Assessee should insist on issuance of form ASMT-12 which is the proof of conclusion of scrutiny of returns. If the assessee is not able to satisfactorily explain or comply with provisions of section 61, the proper officer may initiate actions under section 65 (Audit) or section 66 (Special Audit) or section 73, 74 or 74A (Issuance of SCN).<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....