Standard Operating Procedure for Scrutiny of Returns for F.Y.

2017-18 and 2018-19

Section 61 of the CGST Act, 2017 read with rule 99 of CGST Rules, 2017 provides for scrutiny of returns
and related particulars furnished by the registered person. The process of scrutiny is detailed herewith
in light of Board’s Instruction No. 02/2022-GST dated 22.03.2022.

Overview:-

Selection of returns for scrutiny is to be based on specific risk parameters. 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 for further
action.

Superintendent of Central Tax” is the proper officer to scrutinize the returns. The proper officer, with the
approval of the divisional Assistant / Deputy Commissioner, shall finalize a scrutiny schedule. Such scrutiny
schedule will specify month-wise schedule for scrutiny in respect of all the GSTINs selected for scrutiny.
While preparing the scrutiny schedule, the scrutiny of the GSTINs, which appear to be riskier based on the
likely revenue implication indicated by DGARM, may be prioritized. Such scrutiny schedules in respect of
all the ranges within the CGST Zone shall be reported to the DGGST by the concerned Zone.

The proper officer shall conduct scrutiny of returns pertaining to minimum of 3 GSTINs per month. The
Proper Officer shall scrutinize the returns and related particulars furnished by the registered person to
verify the correctness of the returns. Information available with the proper officer on the system in the
form of various returns and statements furnished by the registered person and the data/details made
available through various sources like DGARM, ADVAIT, GSTN, E-Way Bill Portal, etc. may be relied upon
for this purpose. An indicative list of parameters to be verified is enclosed herewith. The proper officer
may also consider any other parameter, as he may deem fit, for the purpose of scrutiny.

The proper officer shall issue a notice to the registered person in FORM GST ASMT-10 informing him of
the discrepancies noticed and seeking his explanation thereto. While issuing such notice, the Proper
Officer may, as far as possible, quantify the amount of tax, interest and any other amount payable in
relation to such discrepancies.

The registered person may accept the discrepancy mentioned in the notice issued in FORM GST ASMT-10,
and pay the tax, interest and any other amount arising from such discrepancy through FORM GST DRC-03
and inform the same or may furnish an explanation for the discrepancy in FORM GST ASMT-11 to the
proper officer within the time period prescribed under rule 99 of CGST Rules.

Where the explanation furnished by the registered person or the information submitted in respect of
acceptance of discrepancy and payment of dues is found to be acceptable by the Proper Officer, he shall
conclude the proceedings by informing the registered person in FORM GST ASMT-12.

In case no satisfactory explanation is furnished by the registered person in FORM GST ASMT-11 within a
period of thirty days of being informed by the proper officer or such further period as may be permitted
by him or where the registered person, after accepting the discrepancies, fails to pay the tax, interest and
any other amount arising from such discrepancies, the proper officer, may proceed to determine the tax
and other dues under section 73 or section 74. However, if the proper officer is of the opinion that the
matter needs to be pursued further through audit or investigation to determine the correct liability of the
said registered person, then he may refer the matter to the jurisdictional Principal Commissioner /
Commissioner through the divisional Assistant / Deputy Commissioner, for the decision whether the
matter needs to be referred to Audit Commissionerate or Anti-evasion Wing of the Commissionerate, as
the case may be.

The timeline for scrutiny of return has to be followed as per the above said instruction No. 02/2022-GST
dated 22.03.2022. Further, a Scrutiny Register and Scrutiny Progress Report shall be prepared by the
proper officer at the end of every month. The monthly Scrutiny Progress Report for each Commissionerate
of the CGST Zone shall be compiled for each month and forwarded to the DGGST. Any communication
with the taxpayer for the purpose of scrutiny shall be made with the use of DIN as per the guidelines
mentioned in the Circular No. 122/41/2019-GST dated 5th November 2019. It is envisaged to leverage
technology and risk-based tools to encourage self-compliance and to conduct scrutiny of returns with
minimal interaction with the registered persons.

INDICATIVE LIST OF PARAMETERS FOR SCRUTINY

• Tax liability on account of “Outward taxable supplies (other than zero rated, nil rated and
exempted)” and “Outward taxable supplies (zero rated)” of FORM GSTR-3B may be verified with
corresponding tax liability in respect of outward taxable supplies declared in FORM GSTR-1.
Advances adjusted are accurately reflected by reporting the same in GSTR 1.

• Tax liability on account of “Inward supplies (liable to reverse charge)” of FORM GSTR-3B may be
verified with the (1) ITC availed in Form GSTR 3B. (2) ITC in respect of inward supplies attracting
reverse charge of FORM GSTR-2A and (3) Tax/Cess paid in cash of FORM GSTR-3B.

• ITC availed in respect of “Inward supplies from ISD” in FORM GSTR-3B may be verified with FORM
GSTR2A.

• ITC availed in respect of “All other ITC” in FORM GSTR-3B may be verified with FORM GSTR-2A.

• It may be verified that the taxable value declared on account of “Outward taxable supplies (other
than zero rated, nil rated and exempted)” in FORM GSTR-3B is not less than the net amount liable
for TCS and TDS credit in FORM GSTR-2A.

• Liability on account of outward supplies in FORM GSTR-3B should be verified with the Tax liability
as declared in e-way bills.

• Claim of ITC in respect of supplies from taxpayers whose registrations have been cancelled
retrospectively.

• Ineligible ITC availed in respect of invoices / debit notes issued by the suppliers who have not filed
their GSTR-3B returns for the relevant tax period.

• Whether GSTR-3B of a tax period is filed after the last date of availment of ITC in respect of any
invoice / debit note as per section 16(4). In such cases, no ITC shall be availed in the return.

• ITC availed in respect of “Import of goods” in FORM GSTR-3B may be verified with corresponding
details in FORM GSTR-2A and may also be cross-verified from ICEGATE portal.

• Whether the registered person has made reversals of ITC in accordance with provisions of rule 42
and rule 43 of the CGST Rules.

• Whether the registered person has paid interest liability in terms of section 50.

• Whether the registered person has paid late fee in terms of section 47 in respect of
returns/statements.

This is only an indicative list of parameters to be verified. The proper officer may also consider any other
parameter, as he may deem fit, for the purpose of scrutiny.

Standard Operating Procedure for Scrutiny of Returns for F.Y. 2019-20 onwards
Attention is invited to Instruction No. 02/2022-GST dated 22nd March, 2022, wherein a SOP was provided
for scrutiny of returns under section 61 of CGST Act, 2017 read with rule 99 of CGST Rules, 2017 for FY
2017-18 and 2018-19. It was mentioned in the said instruction that the said SOP was issued as an interim
measure till the time a Scrutiny Module for online scrutiny of returns is made available on the ACES-GST
application. Therefore, new instruction No. 02/2023-GST dated 26.05.2023 was issued by board for
scrutiny of returns for F.Y.2019-20 onwards.

Further, DG Systems has also developed functionality “Scrutiny of Returns”, containing the online
workflow for scrutiny of returns in the CBIC ACES-GST application. Advisory No. 22/2023- Returns dated
16.05.2023 has also been issued by DG Systems in this regard, along with a User Manual providing for the
detailed workflow of the said functionality. The GSTINs selected for scrutiny for the Financial Year 2019-
20 have also been made available on the scrutiny dashboard of the proper officers on ACES-GST
application.

The functionality provides for the detailed workflow for communication of discrepancies noticed, in
relation to the details furnished in the returns, by the proper officer in FORM GST ASMT-10 to the
registered person, receipt of reply from the registered person in FORM GST ASMT-11, issuance of order
in FORM GST ASMT-12 or taking further action for issuance of show cause notice under Section 73 or 74
of CGST Act, 2017 or for referring the matter for Audit or investigation, as the case may be.

The details of GSTINs selected for scrutiny for a financial year will be made available by DGARM through
DG Systems on the scrutiny dashboard of the concerned proper officer of Central Tax on ACES-GST
application. The details of the risk parameters, in respect of which risk has been identified for a particular
GSTIN, and the amount of tax/ discrepancy involved in respect of the concerned risk parameters (i.e. likely
revenue implication), will also be shown on the scrutiny dashboard of the proper officer for their
convenience. The proper officer shall, therefore, rely upon the latest available data.

Once the details of GSTINs selected for scrutiny for a financial year are made available on the scrutiny
dashboard of the concerned proper officer of Central Tax on ACES-GST application, the proper officer,
with the approval of the divisional Assistant/ Deputy Commissioner, shall finalize a scrutiny schedule in
the format specified in Annexure A of Instruction 02/2022- GST dated 22nd March 2022. While preparing
the scrutiny schedule, the scrutiny of the GSTINs, which appear to be riskier based on the likely higher
revenue implication indicated on the dashboard, may be prioritized.

The proper officer shall conduct scrutiny of returns pertaining to minimum of 4 GSTINs per month. The
Proper Officer shall scrutinize the returns and related particulars furnished by the registered persons to
verify the correctness of the returns. Information available with the proper officer on the system in the
form of various returns and statements furnished by the registered person and the data/ details made
available through various sources like DGARM, ADVAIT, GSTN, E-Way Bill Portal etc. may be relied upon
for this purpose.

For the convenience of proper officers, details of the risk parameters involving risk/ discrepancies in
respect of the GSTIN, along with the amount of tax/discrepancy involved in respect of the concerned risk
parameters (i.e. likely revenue implication), will be made available in the scrutiny dashboard of the proper
officer. Besides, DGARM will also make available to the field formations the details of all the risk
parameters taken into consideration by them for the selection of GSTINs for scrutiny of returns for the
particular financial year. In addition to these parameters, proper officer may also consider any other
relevant parameter, as he may deem fit, for the purpose of scrutiny.

It may be noted that at this stage, the proper officer is expected to rely upon the information available
with him on records. As far as possible, scrutiny of return should have minimal interface between the
proper officer and the registered person and, there should normally not be any need for seeking
documents/ records from the registered persons before issuance of FORM GST ASMT-10.

The proper officer shall issue a notice to the registered person in FORM GST ASMT-10 through the scrutiny
functionality on ACES-GST application, informing him of the discrepancies noticed and seeking his
explanation thereto. The notice in FORM GST ASMT-10, issued by the proper officer through scrutiny
functionality on ACES-GST application, shall be communicated by the system to the concerned registered
person on the common portal and therefore, there will be no need for sending any manual
communication of notice in FORM GST ASMT-10 by the proper officer to the registered person separately.
In this regard, the user manual issued by DG Systems may be referred to regarding the detailed procedure
for issuance of FORM GST ASMT-10 on scrutiny functionality on ACES-GST application. The proper officer
shall mention the parameter-wise details of the discrepancies noticed by him in FORM GST ASMT-10 and
shall also upload the worksheets and supporting document(s)/ annexures, if any.

The reply furnished by the registered person in FORM GST ASMT-11 on the common portal shall be made
available to the concerned proper officer in the scrutiny dashboard on ACES-GST application.

Where the explanation furnished by the registered person or the information submitted in respect of
acceptance of discrepancy and payment of dues is found to be acceptable by the proper officer, he shall
conclude the proceedings by informing the registered person in FORM GST ASMT-12 through the scrutiny
functionality on ACES-GST application.

In case no satisfactory explanation is furnished by the registered person in FORM GST ASMT-11 within a
period of thirty days of being informed by the proper officer or such further period as may be permitted
by him or where the registered person, after accepting the discrepancies, fails to pay the tax, interest and
any other amount arising from such discrepancies, the proper officer, may proceed to determine the tax
and other dues under section 73 or section 74 of CGST Act. The user manual issued by DG Systems may
be referred to for the procedure for initiating proceedings under section 73 or 74 of the CGST Act on the
scrutiny functionality on ACES-GST application.

However, if the proper officer is of the opinion that the matter needs to be pursued further through audit
or investigation to determine the correct liability of the said registered person, then he may take the
approval of the jurisdictional Principal Commissioner / Commissioner through the divisional Assistant/
Deputy Commissioner, through e-file or other suitable mode, for referring the matter to the Audit
Commissionerate or anti-evasion wing of the Commissionerate, as the case may be. The copy of the said
approval needs to be uploaded while referring the matter to the concerned formation through the
scrutiny functionality, as per the procedure detailed in the user manual issued by DG Systems.

The timeline for scrutiny of return has to be followed as per the above said instruction No. 02/2023-GST
dated 26.05.2023. The details of action taken by the proper officer in respect of GSTINs allocated to him
for scrutiny will be available in the form of two MIS reports in the scrutiny dashboard on the ACESGST
application. MIS report ‘Monthly Scrutiny Progress Report’ (in the format specified in Annexure-D of
Instruction No.02/2022 dated 22.03.2022) displays summary information of the status of scrutiny of
returns for the selected month of a financial year for the selected formation. Besides, the GSTIN-wise
details of action taken in respect of scrutiny of returns in respect of allotted GSTINs is made available in
the MIS report ‘Scrutiny Register’ (in the format specified in Annexure-C of Instruction No.02/2022 dated
22.03.2022) on the scrutiny dashboard. In view of this, the requirement of compiling and sending the
Monthly Scrutiny Progress Report by the CGST zones to DGGST is dispensed with for the Financial Year
2019-20 onwards.

It is also added that the progress of the scrutiny exercise as per the scrutiny schedule shall be monitored
by the jurisdictional Principal Commissioner/ Commissioner on regular basis.

INDICATIVE LIST OF PARAMETERS FOR SCRUTINY

• Tax liability on account of “Outward taxable supplies (other than zero rated, nil rated and
exempted)” and “Outward taxable supplies (zero rated)” of FORM GSTR-3B may be verified with
corresponding tax liability in respect of outward taxable supplies declared in FORM GSTR-1.
Advances adjusted are accurately reflected by reporting the same in GSTR 1.

• Tax liability on account of “Inward supplies (liable to reverse charge)” of FORM GSTR-3B may be
verified with the (1) ITC availed in Form GSTR 3B. (2) ITC in respect of inward supplies attracting
reverse charge of FORM GSTR-2A and (3) Tax/Cess paid in cash of FORM GSTR-3B.
 • ITC availed in respect of “Inward supplies from ISD” in FORM GSTR-3B may be verified with FORM
GSTR2A.

• ITC availed in respect of “All other ITC” in FORM GSTR-3B may be verified with FORM GSTR-2A.

• It may be verified that the taxable value declared on account of “Outward taxable supplies (other
than zero rated, nil rated and exempted)” in FORM GSTR-3B is not less than the net amount liable
for TCS and TDS credit in FORM GSTR-2A.

• Liability on account of outward supplies in FORM GSTR-3B should be verified with the Tax liability
as declared in e-way bills.

• Claim of ITC in respect of supplies from taxpayers whose registrations have been cancelled
retrospectively

• Ineligible ITC availed in respect of invoices / debit notes issued by the suppliers who have not filed
their GSTR-3B returns for the relevant tax period.

• Whether GSTR-3B of a tax period is filed after the last date of availment of ITC in respect of any
invoice / debit note as per section 16(4). In such cases, no ITC shall be availed in the return.

• ITC availed in respect of “Import of goods” in FORM GSTR-3B may be verified with corresponding
details in FORM GSTR-2A and may also be cross-verified from ICEGATE portal.

• Whether the registered person has made reversals of ITC in accordance with provisions of rule 42
and rule 43 of the CGST Rules.

• Whether the registered person has paid interest liability in terms of section 50.

• Whether the registered person has paid late fee in terms of section 47 in respect of
returns/statements.

This is only an indicative list of parameters to be verified. The proper officer may also consider any other
parameter, as he may deem fit, for the purpose of scrutiny.