CBIC’s Revisd SOP for Scrutiny of GST Returns (FY 2019-20 Onwards)

Background

CBIC issued a revised Standard Operating Procedure for scrutiny of GST returns starting from financial year 2019-20. The new framework relies on an automated scrutiny module inside the ACES-GST backend, enabling data-driven review of returns and reducing manual checks.

Under Section 61 of the CGST Act and Rule 99 of the CGST Rules, Proper Officers may scrutinise GST returns to verify correctness. Earlier, scrutiny was manual and varied across formations. CBIC issued Instruction No. 02/2022-GST for FY 2017-18 and 2018-19, but with increasing data volume, a system-driven approach became essential.

The revised SOP therefore introduces automated scrutiny for FY 2019-20 onwards.

CBIC GST Instructions 2/2023 dated 26/05/2023: Revised SOP for Scrutiny of GST Returns (FY 2019-20 Onwards)

Earlier Provisions

Before FY 2019-20:

• Scrutiny depended on each officer’s manual checks.
• Parameters varied across zones.
• Cases were selected based on local risk perception.
• Instruction 02/2022-GST governed scrutiny for FY 2017-18 and 2018-19.

These issues led to inconsistent scrutiny quality and delays.

Key Changes Introduced

The new SOP shifts scrutiny to a risk-based, analytics-driven system, improving accuracy and easing departmental workload.

1. Automated Scrutiny Module

• Integrated into ACES-GST backend.
• Pulls data from DGARM, ADVAIT, GSTN, and the E-Way Bill Portal.
• Performs analytics-based validations, helping officers spot mismatches quickly.

CBIC’s Automated GST Return Scrutiny Module: Enhancing Compliance

2. Risk-Based Selection of GSTINs

• DGARM now identifies GSTINs based on risk parameters.
• Scrutiny covers all returns of that GSTIN for the selected financial year.

3. End-to-End Scrutiny Workflow

A clear workflow with statutory forms:

• Form GST ASMT-10 – issued within scheduled month.
• Form GST ASMT-11 – taxpayer reply within 30 days (extendable).
• Form GST ASMT-12 – acceptance of reply within 30 days.
• If no reply → initiation under Sections 73/74 within 15 days.
• If reply unsatisfactory → referral to Audit/Anti-Evasion within 30–45 days.

4. MIS-Based Monitoring

Two monitoring tools added to ACES-GST:

• Monthly Scrutiny Progress Report
• Scrutiny Register

Monthly reporting to DGGST is not required for FY 2019-20 onwards.

5. Clarified Year-Wise Applicability

• Automated module applies only from FY 2019-20.
• FY 2017-18 and 2018-19 continue under earlier SOP.

Practical Impact on Businesses

• Officers now rely heavily on system-generated risk indicators.
• High-risk mismatches (ITC, outward liability, e-way bill data) are more likely to trigger scrutiny.
• Documentation quality becomes crucial since scrutiny is analytics-driven.
• Quicker responses prevent interest and penalty exposure.

Actionable Steps for Registered Persons

1. Before Scrutiny Triggers

• Reconcile GSTR-1 vs GSTR-3B monthly.
• Compare ITC as per GSTR-2B with books and GSTR-3B.
• Match e-way bills with outward/inward supplies.
• Keep invoice-wise and ledger-wise records ready.

2. On Receiving ASMT-10 Notice

• Review each discrepancy listed.
• Prepare reconciliations with explanations and documentary proof.
• File reply in Form ASMT-11 within 30 days.
• If tax is payable, make voluntary payment in Form DRC-03, which helps reduce litigation.

3. If Reply Is Accepted

You will receive Form ASMT-12, and scrutiny for that year ends.

4. If Reply Is Not Accepted

• Case may be referred to Audit/Anti-Evasion Wing.
• Further investigation or proceedings may follow.

5. Portal Navigation Tips

• ACES-GST login → Scrutiny Dashboard → View discrepancy list → Upload reply.
• Keep PDF copies of reconciliations and workings ready for upload.
• Ensure all documents are searchable and properly labelled.

Illustrations / Scenarios

Scenario 1: ITC Mismatch Between GSTR-3B and GSTR-2B

The module identifies excess ITC claimed in GSTR-3B.

• ASMT-10 issued asking for justification.
• If mismatch relates to invoices uploaded late by suppliers, provide documentary proof and supplier communication.
• Officer may accept explanation in ASMT-12.

Scenario 2: Outward Supplies Mismatch with E-Way Bills

Analytics detect outward supply value lower than e-way bill value.

• Taxpayer must reconcile cancelled e-way bills or show non-taxable movements.
• If unresolved, case may go to Audit wing.

Scenario 3: Reversal Under Rule 42/43 Missing

System notices no reversal for exempt supplies although turnover indicates mixed supplies.

• Taxpayer explains computation basis or corrects the return with DRC-03.

Reference Details

• Instruction No. 2/2023-GST dated 26 May 2023.
• Sections 61, 73, 74 of the CGST Act.
• Rule 99 of the CGST Rules.
• Earlier reference: Instruction No. 2/2022-GST.
• ACES-GST MIS tools for monitoring.

Conclusion

The revised SOP marks a major shift in GST return scrutiny. Automation, data analytics, and clear timelines create uniformity across formations. From FY 2019-20 onwards, scrutiny is faster, more structured, and more transparent. Businesses should maintain accurate records, reconcile data regularly, and respond promptly to scrutiny notices to ensure smooth compliance.