Now the GST Scrutiny shall soon become a routine thing very soon as the Central Board of Indirect Taxes and Customs (CBIC) has issued an instruction to Department on Standard Operating Procedure (SOP) on 22nd March 2022 for Scrutiny of GST Returns for the FY 2017-18 and 2018-19.
The instructions mainly state the methods for selection of cases for scrutiny, Scrutiny schedule, and timeline. SOP is issued by the CBIC to ensure uniformity in the selection of scrutiny and other related procedures.
Where any return is selected for scrutiny, the Officer will inform the registered Taxpayer regarding discrepancies noticed in Form GST ASMT 10.
A registered person may accept the discrepancy mentioned and pay the tax, interest and any other amount mentioned and inform the same in Form GST ASMT 11. If the explanation is found acceptable, Proper Officer shall inform him accordingly in Form GST ASMT 12.
If no satisfactory explanation is furnished within 30 days of or after accepting discrepancies person failed to take corrective action, and the proper officer may initiate appropriate action.
Grounds for Scrutiny of GST Returns are listed below:-
- Tax Liability on Outward Supplies:
Tax liability of Outward Taxable Supplies and Outward Taxable supplies (zero-rated) as declared in Form GSTR 3B may be verified with corresponding tax liabilities in respect of outward taxable supplies declared in Form GSTR 1.
Where tax liability of supplies declared in Form GSTR 1 exceeds the liability declared in Form GSTR 3B, it may indicate short payment of taxes.
- Tax Liability on Inwards Supplies (RCM):
- ITC availed in Form GSTR 3B-
Availment of ITC in excess of the liability discharged on account of reverse charge supplies may indicate either short payment of tax liability on account of RCM supplies or excess availing of input tax credit in respect of RCM supplies
- ITC in respect of Inward Supplies attracting Reverse charge as per Form GSTR 2A-
Where the RCM supplies declared in FORM GSTR-3B are less than the inward supplies attracting reverse charge as per details available in FORM GSTR-2A, it may indicate short payment of tax liability on account of RCM supplies.
- Taxes/cess paid in cash as per GSTR 3B-
Where the tax liability offset in cash is less than the liability arising on account of reverse charge, it may indicate a short payment of tax.
- ITC on Inward Supplies from ISD:
ITC availed in respect of Inward supplies from ISD in Form GSTR 3B may be verified with GSTR 2A.
- ITC on all Other ITC:
ITC availed in respect of “All other ITC” in Form GSTR 3B may be verified with Form GSTR 2A. Also, the tables in Form GSTR 2A contain details of supplies attracting forward and reverse charges. So, only the supplies against which there is ‘No’ or ‘N’ may be considered.
- Outward supplies and TDS & TCS credit:
The taxable value declared on account of “Outward Taxable Supplies (other than zero-rated, nil rated, and exempted)” in Form GSTR 3B cannot be less than the net amount liable for TCS and TDS credit in Form GSTR 2A. Any discrepancy may indicate a short payment of taxes.
- Outward supply and Liability in E-Way bill:
A registered person is required to declare details of all outward supplies. Therefore, liability declared in Form GSTR 3B should not be less than tax liability as declared in the e-way bills.
- ITC from taxpayers whose registration is canceled:
It may be verified whether the person has availed ITC in respect of invoices or debit notes issued by the suppliers after the effective date of cancellation of their registrations as the recipient is not entitled to claim ITC in respect of such invoices or debit notes.
- ITC on non-filing of GSTR 3B:
Where GSTR 3B is not filed, the status in GSTR 2A will reflect as “No” which indicates the supplier has furnished details in GSTR 1 but has not furnished the return in GSTR 3B for the corresponding tax period. Availment of ITC in respect of such invoice/ debit notes may be checked.
- ITC claimed on a return filed after the due date:
If any return in FORM GSTR-3B is furnished after the due date by the registered person under scrutiny, any ITC availed therein is inadmissible.
(For the FY 2017-18, availing of ITC was allowed till the due date of furnishing of the return in Form GSTR 3B for March 2019.)
- ITC on Import of Goods:
ITC availed in Form GSTR 3B will be verified with details in Form GSTR 2A. If required, details of import may be cross verified from ICEGATE Portal.
- Reversal of ITC:
Registered person avails and reverses ITC in Form GSTR 3B. It may be verified whether required reversals have actually been made by the registered person.
- Payment of Interest:
It may be verified whether interest payable on delayed payment of tax has actually been paid by the registered person.
- Payment of Late Fees:
It may be verified whether the late fee payable for delayed filing of returns/ statements has actually been paid by the registered person.
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