Scrutiny of returns under Section 61 of the CGST Act is the department's primary desk-based verification tool. When the system detects discrepancies in the returns filed by a taxpayer, it generates a scrutiny notice in Form GST ASMT-10, requiring the taxpayer to explain the discrepancies within 30 days.
This article explains what triggers scrutiny and how to prepare an effective response.
What Triggers Scrutiny
The GSTN's risk analytics system flags returns with:
- GSTR-1 vs GSTR-3B mismatch: Outward supplies reported but tax not fully paid.
- ITC mismatch: ITC claimed in GSTR-3B exceeds GSTR-2B.
- Turnover mismatch: GST turnover does not match income tax returns or e-way bill data.
- RCM non-payment: RCM liability not reported or paid.
- Filing pattern anomalies: Sudden changes in turnover or ITC patterns.
The Scrutiny Process
- The officer issues ASMT-10 identifying the discrepancies.
- The taxpayer must respond in Form GST ASMT-11 within 30 days.
- If the explanation is acceptable, the officer may issue Form GST ASMT-12 closing the matter.
- If not satisfied, the officer may proceed with a demand notice under Sections 73/74.
Preparing the Response
- Download the notice and extract the specific discrepancy points.
- Reconcile the data for each discrepancy.
- Prepare a point-wise response with supporting documentation.
- For timing differences, provide month-wise reconciliation.
- For ITC mismatches, provide invoice-level reconciliation with GSTR-2B.
Common Mistakes
- Ignoring the notice within the 30-day deadline.
- Providing incomplete or unsupported explanations.
- Failing to reconcile data before replying.
- Not paying genuine discrepancies.
Conclusion
Scrutiny under Section 61 is the first stage of departmental verification. A well-prepared response can close the matter at this stage, avoiding escalation to a demand notice.
At Anuj Desai & Associates, we provide expert assistance in responding to GST scrutiny notices. Our team can help you analyse discrepancies and prepare effective replies.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.