The SOP prescribes the procedure to be followed by the GST officers with respect to selection of returns for scrutiny, preparation of scrutiny schedule, process of scrutiny to be followed by the proper officer as provided under Rule 99 of the CGST Rules, 2017, timelines within which the scrutiny process to be completed and reporting and monitoring of scrutiny register.

As per Annexure B of the SOP, indicative list of parameters has been provided which can be verified by the GST officers for scrutiny of returns. The list is indicative and not exhaustive and the GST officer may also consider any other parameter, as he may deem fit, for the purpose of scrutiny.

The key areas as per the Instructions which needs to be specifically verified by the officers, are summarized hereinbelow:

1.     Tax liability declared in GSTR-3B is less vis-à-vis tax liability declared in GSTR-1 may be indicative of short payment of tax liability. While calculating the differences in tax liability reported in GSTR-3B vis-à-vis GSTR-1, tax reported in the table ‘advance received in earlier period and adjusted in current period’ of GSTR-1 should be taken into consideration

2.     Output tax liability on account of Reverse Charge Mechanism (‘RCM’) should be verified with the following:

• ITC availed in GSTR-3B on account of RCM i.e. where ITC is more than output tax liability, it is indicative of either ITC excess taken or there is short payment of tax
• ITC under RCM as reflected in GSTR-2A i.e. where tax paid on account of RCM is less than ITC reflected in GSTR-2A
• Total tax liability paid in cash should be more than tax liability on account of RCM

3.     ITC availed in the tables ‘All other ITC’, ‘Inward supplies from ISD’ and ‘import of goods’ in GSTR-3B may be verified with the ITC reflected in respective tables of GSTR-2A along with amendments, if any

4.     Whether taxable value declared in GSTR-3B is less than the amount liable for deduction under TDS and TCS as reflected in respective tables of GSTR-2A

5.     Tax liability declared on account of outward supplies in GSTR-3B should not be less than tax liability declared in E-way bills

6.     ITC availed in respect of invoices of taxpayers whose registration has been cancelled and invoices are issued after the effective date of cancellation or ITC availed in respect of invoices of taxpayers who have not filed GSTR-3B for the relevant tax period

7.     Whether ITC has been availed in respect of invoices after the maximum time period allowed i.e. after the due date of filing GSTR-3B of September following the end of financial year (for the FY 2017-18, last date to claim ITC was due date of filing GSTR-3B for the month of March 2019)

8.     Whether reversal of ITC has been been done in accordance with Rule 42 & 43 of the the CGST Rules, 2017

9.     Whether interest liability and late fee liability has been paid by the registered person in accordance with GST Law

It is advisable for taxpayers to review the returns filed on the GST portal in light of the aforesaid parameters (including other aspects highlighted in the Instructions) and take necessary action to rectify the discrepancies (if any)

Regards,

Reina Legal LLP