GST Automated Return Scrutiny: Mistakes in GST Return that may trigger GST Notice

CBIC has launched Automated GST Return Scrutiny last week. This scrutiny system is about to utilise advanced artificial intelligence and data analytics to identify inconsistencies in returns.

The new system will correlate data from a taxpayer’s different GST filings to guarantee there are no anomalies.

Recently, GST Department released Model All India GST Audit Manual 2023, where all the changes in different areas of GST has been notified. In this manual, return analysis topic also discussed.

Return Analysis

This is a most vital area before commencement of the Audit program. A great deal of the groundwork can be done upon analysis of the available return figures and thereby having a prima-facie idea of the business trend of the auditee.

Illustrative steps that may be considered for an effective Return Analysis:

• HSN code of the goods and/or SAC of the services dealt in by the RTP should be verified where available to ensure that such are in conformity with the schedules/notifications and it is to be checked that the proper rate of tax thereupon was applied on outward supplies as shown in Form GSTR-1 & Form GSTR-3B.
• Time of filing of returns should be noted and should be checked to confirm whether the returns were filed within the prescribed time.
• Outward supplies as declared in Form GSTR-1, Form GSTR-3B and GSTR-9 should be compared with the Books of Accounts as maintained and produced by the auditee. The reconciliation statement, in case of any difference, is required to be examined with supporting documents and explanations along with Form GSTR-9/9A and Form GSTR-9C, if such have been submitted by the auditee.
• Claim of the RTP under different heads like – Zero-rated, Nil rated, Exempted and non-GST outward supplies, etc. as shown in Form GSTR-1, Form GSTR-3B. The reconciliation statement, in case of any difference, is required to be examined with supporting documents and explanations along with Form GSTR-9/9A and Form GSTR-9C, if such have been submitted by the auditee.
• Amount appearing under the head “Advance received” needs to be reviewed carefully since GST is applicable on “Advance received” against future “supply of services”. As per Notification No.66/2017 – CT. dated 15.11.2017; payment has been delinked to determine time of supply in case of supply of goods.

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