GST Scrutiny: How to Handle a GST ASMT-10 Scrutiny Notice
Updated: Aug 28
Each GST-registered taxpayer is required to timely file one or more prescribed GST returns. The tax authorities will review these GST returns upon filing if any discrepancies or mistakes in the information provided occur. Since the automatic return inspection module has been put into place, taxpayers need to be extra careful to make sure their returns are consistent. Learn more about the alternatives available to a taxpayer to react to a scrutiny notice, as well as the scrutiny procedure, in this article.
Table of Contents
Understanding the Scrutiny Assessment under GST
Based on specific risk indicators, a GST officer would carefully review a taxpayer's GST return to ensure accuracy. Should he discover any inaccuracies, he will send the registered taxpayer a scrutiny notice requesting an explanation. A personal hearing isn't feasible for this kind of evaluation, though. Before responding to the letter and providing a rationale, the taxpayer must acknowledge the differential tax that has been asked, along with any applicable interest, and pay it. The taxpayer is notified and the proceedings are closed without taking any further action in the form of an order of acceptance of reply, or ASMT-12, if the officer is satisfied with the reply. If not, the GST officer may take additional measures in the following situations:
The taxpayer fails to submit an explanation or pay taxes.
Within thirty days of receiving notification, the taxpayer fails to respond or make the necessary corrections.
The tax officer does not find the response to be adequate.
In situations like this, the tax officer may additionally take the following actions:
Audit taxes under Section 65
Do a particular audit under Section 66
Section 67 survey/inspection
Start making plans for demand and recovery
If there is a deliberate or inadvertent attempt to commit fraud, send notification of the outstanding demand or deficiency according to Sections 73/74
Goals of Scrutiny Assessment
A scrutiny assessment's primary goal is to confirm the accuracy of the information included in GST returns, such as qualified Input Tax Credit (ITC) vs real claimed, tax payable versus tax paid, and claimed ineligible exemptions or ineligible ITC. A tax officer can choose whether to issue a scrutiny notice based on predetermined risk thresholds. The tax officer can move on with this assessment if these point to a high probability of fraud or default. This is a choice that the tax officer may also make for himself. As the scrutiny evaluation is not a court or legal action, an order cannot be passed.
GST Scrutiny Notice in ASMT-10
After the taxpayers file their GST returns, GST officials are obligated to carefully review the returns. According to Rule 99 of the CGST Rule 2017 and Section 61 of the CGST Act 2017, the appropriate officer must examine the GST returns based on risk parameters. The GST authority's first action following the submission of returns under the GST is to review the returns to find any gaps that the taxpayer may have filed. If a disparity is found, the taxpayer receives the GST return on Form GST ASMT-10.
Form: A Form ASMT-10 scrutiny notice notifies the taxpayer of any anomalies in their GST return, together with any applicable tax, interest, and penalties. Form ASMT-11 should be used to submit a response.
Mode: The tax officer may notify the taxpayer by email or SMS.
Timelines: The amount of time it takes to get a scrutiny notification is not specified. Nonetheless, a taxpayer must reply to such notification or request an extension within 30 days of the notice's issuance.
Contents: ASMT-10's contents are as follows:
Name, address, GSTIN, and tax period are the basic details.
Observed discrepancy with relevant details and request an explanation.
Details about the tax officer, including their DIN, name, signature, and title of the tax officer sending out the notice.
It is necessary for the taxpayer to provide a response to the notification within 30 days of the date the notice was issued. This time frame is subject to an additional 15-day extension.The notice must include information concerning any inconsistencies or deviations, as well as any applicable follow-up taxes.
Reasons for Issuing GST ASMT-10
As per Rule 99 of the CGST Rules, 2017 and Section 61 of the CGST Act, 2017, the appropriate officer must review the GST return using the information at his disposal. The following reasons are typically used to issue the GST ASMT-10:
Variation between the output tax obligations (GSTR-1 and GSTR-3B): The notice will demand the taxpayer to pay the differential tax amount plus interest if, according to the GST site, the output tax liability stated in GSTR-1 is higher than the output tax liability reported in GSTR-3B.
Input Tax Credit Claimed Difference (GSTR-2A/2B and GSTR-3B): The notification will request an explanation from the taxpayer if the ITC claimed in GSTR-3B is less than the ITC shown in GSTR-2A or GSTR-2B.
Ineligible Input Tax Credit claimed: The appropriate officer may request that the taxpayer provide an explanation of whether or not the following Input Tax Credits are claimed in GSTR-2A.
ITC is claimed for suppliers whose GST registration is revoked starting on the date prior to the invoice's issue; examples of such suppliers include insurance, motor vehicles, construction, etc., and whose HSN Code is ineligible under Section 17(5) of the CGST Act.
ITC is showing up for those GSTR-1 filings that were submitted after the deadline;
ITC for vendors that filed a GSTR-1 but did not submit a GSTR-3B or pay the applicable tax
Response to a Scrutiny Notice with ASMT-11
The taxpayer should verify that the information in the notice is accurate before responding to the tax officer. If the taxpayer agrees to the liability raised in the notice and there is any differential tax liability that needs to be paid, he must pay it and then respond to the notice in ASMT-11. One of the two scenarios could occur:
Scenario 1: Accepts the tax owed according the notice and has already made the payment; will specify the payment details when responding in ASMT-11;
Scenario 2: Accepts the tax owed as stated in the notice, but has not yet made the payment. Will respond in ASMT-11 after receiving payment via one of the following methods:
Use Form DRC-03 to pay taxes.
Provide a GSTR-1 supply invoice, debit note, updated invoice, and amended debit note.
Pays taxes or reverses input tax when submitting a GSTR-3B.
Steps to Reply to a Scrutiny Notice
Step 1: To access all of the replies submitted to the tax department, select the 'Replies' tab on the case details page. Click "Notice" to add a response.
Step 2: Provide your response and any payment information.
Step 3: To add more information, click "ADD."
Step 4: Select a file to upload along with any response.
Step 5: Choose the authorised signatory and the verification checkbox.
Step 6: Click "Preview" after entering the location.
Step 7: Verify that all of the information has been entered correctly and select "File."
Step 8: The page where you submit your application will appear.
Step 9: Use EVC or DSC to submit. There will be a notification stating that the reply was successful. The status of the answers tab will be updated to "Reply furnished, pending with tax officer."
Since the entire GST system operates online, internet channels are used for all parts of return examination, including notice issuance, payment, response, and selection. In certain situations, the Proper Officer must upload offline submissions to the system under the assigned "reference tab." In reference to the deadline for replying to a notice of discrepancy that the appropriate officer issues during the scrutiny of the return, the officer may allow an extension of time, not to exceed 30 days from the date of notification, for the taxpayer to submit a response.
Actions Taken after a Response to a Scrutiny Notice
The appropriate officer may take any of the following actions after receiving the response.
Where an adequate response is provided:
The Proper Officer will issue an order in Form GST ASMT-12 stating that the taxpayer's response is deemed adequate and that the related proceedings have been dropped if they are pleased with the information provided. The preconfigured format of GST ASMT-12 is as follows:
“This has reference to your reply dated ——- in response to the notice issued vide reference no. ———- dated — . Your reply has been found to be satisfactory and no further action is required to be taken in the matter. “
Where the response is deemed unsatisfactory
If the response is inadequate, the appropriate officer may pursue additional measures. The following sections allow the tax officer to issue a Show Cause Notice on Form GST DRC-01:
Section 65 refers to a tax authority audit.
Special Audit under Section 66.
Section 67 refers to an audit or survey.
The purpose of Sections 73 and 74 is to ascertain the tax obligations resulting from non-payment, inadequate payment, inaccurate reimbursement, or improper use of input tax credit, provided that there is no deliberate fraud or deliberate falsification or concealment of information
Conclusion
If any abnormalities are discovered in the GST returns, a GST ASMT-10 is issued; the taxpayer must comply with this form to prevent further negative action from being taken against them. It is possible to lower the likelihood of receiving a GST ASMT-10 by being extremely cautious while filing GST returns. The likelihood of a GST DRC-01, or show cause notice, being issued decreases if GST ASMT-10 is correctly answered with supporting documentation and information and if GST ASMT-12 is issued by the GST authorities.
FAQ
Q1. What is Form ASMT-10 in GST?
GST ASMT-10 is a major notice issued by tax authorities to taxpayers when anomalies or inconsistencies in their filed GST returns are found. As a formal communication tool, this notification informs the taxpayer of the differences that have been found and gives them a chance to ask questions or have any errors corrected.
Q2. Does the issuance of notice in ASMT-10 mean confirmation of demand under GST?
Under Section 61 of the GST Act, GST returns are initially scrutinised after filing. Upon noticing a discrepancy during the scrutiny process, the appropriate party will notify the taxpayer of the deviation and any potential tax consequence that may result from it. The GST ASMT-10 is a preliminary notice regarding a discrepancy in GST returns; it does not validate the demand as per the GST legislation.
Q3. Is it required that a notice be sent out using Form GST ASMT-10?
Only in cases where there is a discrepancy in the GST return will a notice be sent in the GST ASMT-10. For this reason, issuing form GST ASMT-10 is not required.
Q4. Should GST ASMT-10 be issued before form GST DRC-01?
Even in the absence of a notification in Form GST ASMT-10, a show-cause notice in Form GST DRC-01 may be given directly. Furthermore, there is no requirement that the GST DRC-01 be provided if the GST ASMT-12 is not issued.
Q5. What precautions can help taxpayers prevent a notice in Form GST ASMT-10?
To lessen the likelihood of receiving a GST ASMT-10, the taxpayer must make the following notes while filing GSTR-1 and GSTR-3B:
The tax liability paid through GSTR-3B and the output tax liability stated in GSTR-1 should match.
The amount of qualifying ITC as reported in GSTR-2B for such a period shall not be greater than the Input Tax Credit claimed in GSTR-3B.
It is not advisable to claim any ITCs that appear as ineligible in GSTR-2B, such as those related to insurance, cars, etc.
Q6. What things should be considered while providing a response to GST ASMT-10?
The following considerations must be made by the taxpayer while providing a response to GST ASMT-10:
Within the time frame given in the notification itself, a response to the GST ASMT-10 must be sent. Any delay in providing a response could result in more litigation.
The taxpayer is required to take care of every single concern that is listed in the notice.
When sending a response, be sure to provide accurate reconciliation of the input tax credit as well as supporting documentation (such as shipping bills, entry bills, copies of invoices, and departmental certificates).
Q7. What is the GST scrutiny time limit?
The amount of time it takes to get a scrutiny notification is not specified. Nonetheless, a taxpayer must reply to such notice within 30 days after the date of issuance or, if an extension is requested, no later than 15 days.
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