CBIC rolls out Automated Return Scrutiny Module for GST returns for FY 2019-20 onwards

CBIC has rolled out the Automated Return Scrutiny Module for GST returns in the ACES-GST backend application for Central Tax Officers as a non-intrusive means of compliance verification. This module will enable the officers to carry out scrutiny of GST returns of Centre Administered Taxpayers selected on the basis of data analytics and risks identified by the System. Implementation of this Automated Return Scrutiny Module has commenced with the scrutiny of GST returns for FY 2019-20 and the requisite data for the purpose has already been made available on the officers’ dashboard.



What is Scrutiny of Returns under GST?

As per section 61 of the CGST Act, 2017 read with Rule 99 of the CGST Rules, 2017, the proper officer may scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto.






Where any return is selected for scrutiny, the proper officer shall scrutinize the same with reference to the information available with him, and in case of any discrepancy, he shall issue a notice to the said person in FORM GST ASMT-10, informing him of such discrepancy and seeking his explanation thereto within such time, not exceeding thirty days from the date of service of the notice or such further period as may be permitted by him and also, where possible, quantifying the amount of tax, interest and any other amount payable in relation to such discrepancy.



Thus, scrutiny of returns filed by a tax payer is undertaken by the proper officer and discrepancies, if any, found during such scrutiny is intimated to him. The tax payer is required to reconcile the discrepancies and provide an explanation to the proper officer within 30 days of such intimation. In case the proper officer is satisfied with the reconciliation and the explanations, he may drop the proceedings, else he may initiate appropriate action including those under section 65 (audit) or section 66 (special audit) or section 67 (inspection, search and seizure) or proceed to determine the tax and other dues under section 73 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts) or section 74 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any wilful misstatement or suppression of facts).



Selection of returns for scrutiny

Selection of returns for scrutiny is to be based on specific risk parameters. For this purpose, the Directorate General of Analytics and Risk Management (DGARM) has been assigned the task to select the GSTINs registered with Central tax authorities, whose returns are to be scrutinized and to communicate the same to the field formations from time to time through the DDM portal (to the Nodal Officer of the Commissionerate concerned) for further action.



For convenience of field officers, DGARM would also provide some relevant data (along with likely revenue implication) pertaining to the returns to be scrutinized through the DDM portal. It may be noted that the data provided by the DGARM is generated at a particular point of time which may undergo change at the time of scrutiny of returns by the proper officer due to subsequent compliances carried out by the taxpayer or by the suppliers of the taxpayer. The proper officer shall, therefore, rely upon the latest available data



Differences that may be scrutinized

Notice of discrepancy calling for explanation must be issued in FORM GST ASMT-10 by stating the discrepancy in simple and plain language without lengthy discussion about it. The format provided on GST portal must be used by the Department. Examples of discrepancy includes clerical as well as analytical errors such as;



  • FORM GSTR-3B containing turnover vastly different from turnover in FORM GSTR-1 for the same tax period;


  • TDS-TCS credits appear in FORM GSTR-3B/FORM GSTR-4 but nil outward supply reported;






  • Credit appearing in FORM GSTR-2A/2B is lower than credit taken in FORM GSTR-3B contrary to rule 36(4) of the CGST Rules;


  • Difference in outward supply or tax reported in GSTR 1 and E Way Bill portal;


  • Differences in outward or inward supply reported in GSTR 3B, GSTR 1 and GSTR 9/ 9C;


  • ITC availed from suppliers whose registration has been cancelled;


  • ITC availed wherein the place of supply if outside the State;


  • ITC availed from suppliers who have not filed GSTR 3B and hence not paid the tax;


  • Differences in payment of tax on reverse charge mechanism as reported in GSTR 2A/ 2B and GSTR 3B; and


  • Differences in invoices reported in GSTR 1 and the e-invoice portal.






These are examples of discrepancies that may be picked up by the system and explanation/ reconciliation may be asked from the registered taxpayer.




Thus, scrutiny of GST returns is a non-intrusive method of ascertaining differences filed by the taxpayer in various returns. The system may also compare the data filed in GST system with that on the Income Tax portal, MCA portal and other similar Government portals. This will ensure that in case difference data is filed by the taxpayer on difference sites, the same gets identified and due explanation is sought from the taxpayer. Taxpayers must ensure that in case their return is picked up for scrutiny, any notice received should be attended with highest priority and reply within time should be submitted. This will ensure that the taxpayer utilises his opportunity to file his reply, else it may become more and more difficult to defend his case in future proceedings. This may also lead to complications and increased litigation, which can be avoided by complying with the directions of law.