The Central Board of Indirect Taxes and Customs (CBIC) has announced Standard Operating Procedure (SOP) in order to scrutinise GST returns for FY 2019-20 onwards via releasing guidelines.
Attention is drawn to Instruction No. 02/2022-GST, dated March 22, 2022, which provides a Standard Operating Procedure (SOP) for the scrutiny of returns filed for the fiscal years (FY) 2017–18 and 2018–19 under Section 61 of the Central Goods and Services Tax Act, 2017 read with Rule 99 of the Central Goods and Service Tax Rules, 2017.
The stated instructions made clear that the said Standard Operating Procedure (SOP) was only intended to serve as a provisional measure until the ACES-GST application becomes available along with the Scrutiny Module for online scrutiny of returns.
This is to make you aware that DG Systems has created the functionality “Scrutiny of Returns”, which contains the online process for scrutiny of returns in the CBIC ACES-GST application. In this context, DG Systems has also released Advisory No. 22/2023-Returns, dated May 16, 2023, along with a User Manual outlining the specific process of the said feature.
The GSTINs chosen for scrutiny for the fiscal year 2019–20 have also been provided access to the proper officer’s ACES–GST application.
The functionality has a detailed work process for dealing with discrepancies noticed, regarding the details provided in the returns, by the proper officer in form GST ASMT-10 to the registered person, receipt of a response from the registered person in FORM GST ASMT-11, disclosure of order in FORM GST ASMT-12 or taking next move for disclosure of show cause notice under Section 73 or 74 of CGST Act, 2017 or for referring the issue for Audit or review, as the case may be.
Therefore, the SOP for return scrutiny outlined in Instruction No. 02/2022-GST dated March 22, 2022, has been amended to the following degree concerning return scrutiny for financial years 2019–20 onward:
Choosing the returns for scrutiny and communication of the same to the field formations:
The Directorate General of Analytics and Risk Management (DGARM) will choose which returns to scrutinise based on the various risk factors they have analysed.
The GSTINs registered with the Central Tax authorities whose returns are to be scrutinised for a financial year will be set aside by DGARM, who will then make them accessible through DG Systems on the scrutiny dashboard for the concerned proper officer of Central Tax on ACES-GST application.
For the convenience of the proper officer, the details of the risk parameters, concerning which risk has been identified for a specific GSTIN, and the amount of tax or discrepancy involved regarding the concerned risk parameters (i.e., likely revenue implication), will also be presented on the scrutiny dashboard of the proper officer.
It should be emphasised again that because the data on the dashboard was developed at a specific time for the calculation of risk parameters, it may change when returns are scrutinised due to follow-up compliances made by the taxpayer or by the taxpayer’s suppliers. Therefore, the proper officer must rely on the most recent information.
Schedule of the Scrutiny
The concerned proper officer of Central Tax, with the permission of the divisional assistant/Deputy Commissioner, shall resolve a scrutiny schedule in the format specified in Annexure A of Instruction 02/2022-GST dated March 22, 2022, once the information concerning GSTINs chosen for a financial year is made available on the scrutiny dashboard of the concerned proper officer of Central Tax on the ACES-GST application.
Such a timetable will detail a month-by-month schedule for monitoring concerning all GSTINs, which look to be riskier based on the dashboard’s indication of potential greater revenue implications and may be prioritised.
The principal commissioner or commissioner of the concerned commissionerate will supervise and make sure that the officers working under his jurisdiction adhere to the schedule specified in the scrutiny schedule.
A minimum of 4 GSTINs’ worth of returns must be scrutinised by the proper officer each month. Any returns regarding a financial year for which a certain GSTIN has been chosen for scrutiny are included in the scrutiny of returns for that GSTIN.
Scrutiny Process by the Proper Officer:
The proper officer will carefully review the returns and relevant information provided by the registered persons to make sure that the returns are accurate. Consequently, the proper officer may rely on information that is available on the system in the form of various returns and statements provided by the registered person as well as data and details made available by various sources like DGARM, ADVAIT, GSTN, GST E-Way Bill Portal, etc.
For the convenience of proper officers, as stated above in this article, details of the risk parameters involving risk or discrepancies in respect of the GSTIN will be made available to the field formations, along with the details of all the risk parameters taken into consideration by them for the selection of GSTINs for scrutiny of returns for tax purposes.
Apart from these, a proper officer may additionally consider any additional relevant parameters that he deems appropriate for inspection.
It may be observed that the proper officer, at present, is expected to rely on the data found in his records. The proper officer and the registered person are bound to interact with each other as little as possible throughout the scrutiny of returns, and before issuing FORM GST ASMT-10, the registered person often won’t need to provide any records or documents.
The proper officer shall release a notice to the registered individual using FORM GST ASMT-10 through the scrutiny feature on the ACES-GST application. This notice serves to inform the recipient of any identified differences and to request an explanation from them.
It is worth noting that in certain instances, the registered person may have already made additional payments of tax, cess, interest, etc., subsequent to filing their returns for the relevant tax period, using form DRC-03.
These payments made via FORM DRC-03 should also be taken into account when communicating any discrepancies to the taxpayer through FORM GST ASMT-10.
The notice in FORM GST ASMT-10, issued by the proper officer via the scrutiny functionality on the ACES-GST application, will be transmitted by the system to the concerned registered person on the common portal.
Therefore, there is no requirement for any manual communication of the notice in FORM GST ASMT-10 by the proper officer. It is advisable, whenever possible, for the proper officer to quantify the amount of tax, interest, and any other payable amounts regarding these discrepancies.
Efforts should be made to ensure that the communicated differences are precise and not ambiguous or general. To achieve this, it is recommended to consult the user manual provided by DG Systems, which outlines the comprehensive procedure for issuing FORM GST ASMT-10 through the scrutiny functionality on the ACES-GST application.
The proper officer is required to include parameter-specific information regarding the identified discrepancies in FORM GST ASMT-10, along with the provision of uploading worksheets and supporting documents or annexures, if applicable.
