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Scrutiny of GST returns and Parameters thereof as per SOP

Last updated : January 9th, 2023 12:12 pm

Scrutiny of GST returns and Parameters thereof as per SOP

Recently, the Central Board of Indirect Taxes and Customs, vide instruction no. 02/2022-GST dated 22^nd March 2022, has come up with the Standard Operating Procedure (SOP) to be followed for scrutinizing the returns for the Financial Year 2017-2018 and 2018-2019. The present article briefly explains the said SOP.

The flow of selection of returns for scrutiny and process of scrutiny thereof –

The basic flow of selection of returns and the process of scrutiny thereof is explained hereunder –

• Based on the specific risk parameters, the Directorate General of Analytics and Risk Management will select the GSTIN whose returns are to be scrutinized.
• The selected GSTIN, for scrutiny of returns, will be communicated to the field formation.
• Upon receipt of the list of selected GSTIN, the proper officer will finalize the scrutiny schedule.
• The proper officer will carry out the scrutiny of returns (as explained hereunder).

Following process will be followed by the proper officer for scrutinizing the returns –

• The proper officer will begin scrutinizing the return on the basis of various forms and statements, as furnished by the registered person.
• Additionally, various data/ details, as available from different sources like DGARM, ADVAIT, GSTN portal, E-way bill portal etc. will also be relied upon by the proper officer while scrutinizing the return.
• The proper officer may consider the indicative list of parameters for scrutinizing the returns (covered below).
• In case the proper officer comes across any discrepancies, he will issue a notice in Form GST ASTMT-10 explaining the discrepancies to the registered person and seeking an explanation thereof.
• In case the discrepancies are accepted by the registered person, then, they are required to pay relevant tax, interest or any other specified amount via Form GST DRC-03. Post payment of the required amount, the registered person is required to inform the same to the proper officer via Form GST ASTMT-11 and on being satisfied the proper officer may conclude the proceeding by issuing Form GST ASTMT-12.
• In case the discrepancies are not accepted or the registered person doesn’t provide any satisfactory explanation for the same. Then, the proper officer may determine the tax as per section 73 or section 74 of the Central Goods and Services Tax Act, 2017.

An indicative list of parameters based on which the returns are scrutinized –

The indicative list of parameters on the basis of which the proper officer may scrutinize the returns are highlighted hereunder –

1. Parameters relating to Outward taxable supplies –
   • Outward taxable supplies reflected in Form GSTR-1 can be verified with outward taxable supplies reflected in Form GSTR-3B.
   • Outward supplies reflected in Table 3.1(a) and Table 3.1(b) of Form GSTR-3B can be verified with tax liability as reflected in the e-way bill.
   • Outward taxable supplies reflected in Table 3.1(a) of Form GSTR-3B should not be less than the amount liable for TDS and TCS as credited in Column 6 of Table 9 of Form GSTR-2A.
2. Parameters relating to an Input tax credit –
   • Input tax credit availed in Table 4(A)(1) of Form GSTR-3B, in respect of import of goods, can be verified with Table 10 and Table 11 of Form GSTR-2A.
   • Input tax credit availed in Table 4(A)(4) of Form GSTR-3B, in respect of inward supplies from Input Service Distributors, can be verified with Table 7 of Form GSTR-2A.
   • Input tax credit availed in Table 4(A)(5) of Form GSTR-3B, in respect of all other ITC, can be verified with Table 3 and Table 5 of Form GSTR-2A.
   • Input tax credit claims relating to supplies from the suppliers whose registration has been cancelled retrospectively.
   • Input tax credit availed in respect of invoices/ debit notes issued by the supplier who has not filed a return in Form GSTR-3B for the relevant period.
   • Input tax credit availed in Table 4(A)(2) and Table 4(A)(3) of Form GSTR-3B, in respect of inward supplies liable to reverse charge, can be verified with Table 3 and Table 5 of Form GSTR-2A.
3. Others –
   • Tax liability, in respect of inward supplies liable to reverse charge, as reflected in Table 3.1(d) of Form GSTR-3B can be verified with Table 4(A)(2) and Table 4(A)(3) of Form GSTR-3B.
   • Verify whether the reversal of ITC is in accordance with the provisions of rule 42 and rule 43 of the Central Goods and Services Tax Rules, 2017.
   • Verify whether the registered person had accurately paid interest as per provisions of section 50.
   • Verify whether the registered person had accurately paid a late fee in case of late filing of returns as per section 47.

It is important to note that the above is an indicative list and not an exhaustive list. Accordingly, the proper officer can take up additional parameters also for scrutinizing the return.