Published 13 October 2026
Scrutiny is the department’s lightest form of review, and the most common. No officer visits, and no books are called for. An officer compares a year’s returns with each other and with data the department already holds. Each gap is set out in a notice in FORM GST ASMT-10, and the person is asked to explain it. The difficulty is that the notice often arrives two or more years after the year it covers, and lists comparisons between tables rather than allegations. Yet the reply decides a great deal. An accepted explanation closes the point. An unanswered notice can lead to a demand, an audit or an inquiry.
This guide covers scrutiny in general: how returns are chosen, what the notice must contain, the reply, and what follows. Discrepancies in input tax credit have their own guide, Answering a Scrutiny Notice on Credit: ASMT-10. That guide covers the credit comparisons and the portal steps for the reply, and they are not repeated here.
The law: section 61 and rule 99
Section 61(1) allows the proper officer to “scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any … and seek his explanation thereto”. Sub-section (2) provides that where the explanation is acceptable, “the registered person shall be informed accordingly and no further action shall be taken in this regard”.
Rule 99 sets the procedure. Where a return “is selected for scrutiny”, the officer scrutinises it “with reference to the information available with him”. In case of any discrepancy, he issues a notice in ASMT-10. The notice seeks an explanation “within such time, not exceeding thirty days from the date of service of the notice or such further period as may be permitted by him”. It also quantifies, “where possible”, the tax, interest and other amounts involved.
For Central tax, the proper officer under section 61(1) and (3) is the Superintendent (Circular No. 3/3/2017-GST). State administrations assign their own officers.
How returns are chosen
CBIC has issued two standard operating procedures for its own officers. State administrations follow their own instructions under the same section and rule.
Instruction No. 02/2022-GST (22 March 2022) covers 2017-18 and 2018-19. It was issued “as an interim measure” until an online module existed. The Directorate General of Analytics and Risk Management (DGARM) selected GSTINs “based on specific risk parameters” and sent the lists to Commissionerates. Scrutiny was done manually, and every communication had to carry a document identification number under Circular No. 122/41/2019-GST.
Instruction No. 02/2023-GST (26 May 2023) covers 2019-20 onwards. The Directorate General of Systems built a “Scrutiny of Returns” function in CBIC’s ACES-GST application, and announced it to officers in Advisory No. 22/2023-Returns of 16 May 2023. DGARM selects the GSTINs and places them on the officer’s scrutiny dashboard. The risk parameters and “the amount of tax/ discrepancy involved” are shown with them. Because that data is a snapshot, “the proper officer shall … rely upon the latest available data”.
Both instructions set a routine. The officer prepares a month-wise scrutiny schedule with the approval of the divisional Assistant or Deputy Commissioner, taking the riskier GSTINs first. The minimum is four GSTINs a month under the 2023 instruction, and three under the 2022 one. Scrutiny of a GSTIN means “scrutiny of all returns pertaining to a financial year”, and “a single compiled notice in FORM GST ASMT-10 may be issued … for that financial year”. The officer may also use “any other relevant parameter, as he may deem fit”.
What the officer compares
The parameters for 2019-20 onwards are not published. The 2022 instruction listed thirteen “indicative” parameters in its Annexure B. Those not about credit show the kind of comparison a notice makes:
| Comparison | What a gap may indicate |
|---|---|
| Tax on outward supplies in GSTR-1 (tables 4 to 7, 11A and 11B, net of amendments) against tables 3.1(a) and 3.1(b) of GSTR-3B | Tax declared in GSTR-1 but not paid through GSTR-3B |
| Reverse charge tax in table 3.1(d) against reverse charge invoices in GSTR-2A, and against tax paid in cash in table 6.1 | Reverse charge tax not paid, or not paid in cash |
| Taxable value in table 3.1(a) against the values on which TDS and TCS were reported in table 9 of GSTR-2A | Supplies to deductors or through e-commerce operators left out of the return |
| Tax in tables 3.1(a) and 3.1(b) against tax shown in e-way bills | Goods moved under e-way bills but not declared |
| Interest under section 50 | Interest on late payment not paid |
| Late fee under section 47 | Late fee on late returns not paid |
The remaining parameters concern credit and are discussed in the guide on ASMT-10 for credit. “Related particulars” in section 61 is wide enough to take in the annual return and the reconciliation statement. Officers commonly compare GSTR-9 and GSTR-9C with the monthly returns. See Filing the Annual Return, GSTR-9 and Filing the Reconciliation Statement, GSTR-9C.
What the notice must contain
ASMT-10 states the tax period and financial year, lists “the following discrepancies”, and directs the person “to explain the reasons for the aforesaid discrepancies by” a stated date. It warns that if no explanation is received, “it will be presumed that you have nothing to say in the matter”.
The 2023 instruction adds requirements for officers. The discrepancies are to be “specific in nature and not vague or general”. The officer is to mention them “parameter-wise” and to “upload the worksheets and supporting document(s)/ annexures”. Amounts already paid through DRC-03 after the returns were filed “may also be taken into consideration”. Scrutiny “should have minimal interface”, and “there should normally not be any need for seeking documents/ records from the registered persons before issuance of FORM GST ASMT-10”. The notice is issued through ACES-GST and reaches the person on the common portal, so “there will be no need for sending any manual communication”. The portal’s FAQ adds that an intimation is sent to the registered email address and mobile number.
What to have ready
| Item | Where it comes from |
|---|---|
| The ASMT-10 and every worksheet and annexure | Portal: Services > User Services > View Notices and Orders |
| GSTR-1, GSTR-1A and GSTR-3B for every period of the year | Portal, returns |
| GSTR-9 and GSTR-9C for the year, where filed | Portal, returns |
| GSTR-2A, including the TDS and TCS tables | Portal |
| E-way bills generated in the year | E-way bill portal |
| Sales register and books, reconciled to GSTR-1 and GSTR-3B, period by period | Books |
| Amendments, credit notes and advances adjusted in later periods | Books; GSTR-1 tables 9, 10 and 11 |
| DRC-03 payments, cash ledger and late fee paid | Portal, ledgers |
| An interest working under section 50 for any late payment | Books and ledgers |
The reply: ASMT-11
Rule 99(2) gives two courses. The person “may accept the discrepancy … and pay the tax, interest and any other amount arising from such discrepancy and inform the same”, or “furnish an explanation for the discrepancy in FORM GST ASMT-11”. ASMT-11 has a row for each discrepancy with the reply against it, a table of the “amount admitted and paid”, and a verification by the authorised signatory. One reply can accept some items and explain others.
Payment is usually made through DRC-03, linked from the reply screen. The portal’s FAQ also allows the corrective entry to be made in GSTR-1 or GSTR-3B, for example by reporting an omitted invoice or paying the tax. Section 61(3) contemplates that second course. It treats as a failure the case where the person, “after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted”. The CBIC instructions describe the failure as failing “to pay the tax, interest and any other amount”. Under either wording, the further action in section 61(3) is open where an accepted discrepancy is left uncorrected.
The reply is filed from the REPLIES tab of the case, verified with DSC or EVC. The step-by-step portal path is in the guide on ASMT-10 for credit. Two points from the portal’s FAQ apply to every scrutiny notice. The reply is due “within 30 days from the date of service of notice … to furnish explanation or request for extension”. And “you cannot ask for personal hearing while replying to notice issued for Scrutiny of Returns”. Rule 99 does not provide for a hearing at this stage. An extension of time is for the officer to allow under rule 99(1).
Acceptance: ASMT-12
Where the explanation, or the information about payment, “is found to be acceptable, the proper officer shall inform him accordingly in FORM GST ASMT-12” (rule 99(3)). The form says the reply “has been found to be satisfactory and no further action is required to be taken in the matter”. CBIC’s instructions ask officers to issue it within thirty days of the reply.
Section 61(2) makes the acceptance binding. In Goverdhandham Estate Pvt Ltd v State of Rajasthan (Rajasthan High Court, 17 January 2024), an ASMT-12 accepting the reply was issued after a show cause notice on the same point. The Court set aside both the notice and an enclosure to the ASMT-12 that tried to keep the notice alive. The facts are set out in the guide on ASMT-10 for credit. The Gauhati High Court has since recorded that the department’s special leave petition against that judgment was dismissed on 14 October 2024 (SLP (Civil) Diary No. 37824 of 2024).
When the explanation is not accepted, or no reply is filed
Section 61(3) applies where “no satisfactory explanation is furnished within a period of thirty days … or such further period as may be permitted”, or where an accepted discrepancy is not corrected. The officer “may initiate appropriate action including those under section 65 or section 66 or section 67, or proceed to determine the tax and other dues under section 73 or section 74 or section 74A”. The words “or section 74A” took effect on 1 November 2024. The 2023 instruction, issued before then, still speaks of sections 73 and 74 only.
The instruction sets the officer’s timelines. Action is to begin within fifteen days after the thirty days end where no reply is filed. Where a reply is rejected, it is to begin within thirty days of the reply. A reference to audit or the anti-evasion wing needs the Commissioner’s approval and is to be made within thirty days of the reply, or forty-five days of the ASMT-10 if there is none. Demands must respect the monetary limits for each rank of officer in Circular No. 31/05/2018-GST, and must be started “well ahead of the time limits” in the demand sections.
The portal shows which way the case has gone. Its FAQ lists the statuses, among them “Order for dropping proceedings issued”, “Recommended for action u/s 73”, “Recommended for action u/s 74”, “Recommended for Audit u/s 65”, “Recommended for Special Audit u/s 66” and “Recommended for Survey/ Inspection u/s 67”.
What follows is covered in the later guides in this set: Departmental Audit: Section 65, Before a Notice: DRC-01A and Paying Voluntarily and Replying to a Show Cause Notice, and the Hearing. The law of the demand sections is in Notices and Demands.
Is scrutiny a precondition to a demand?
The High Courts have divided on this.
Not a precondition. In M/s Neelkanth Entrepreneurs Pvt Ltd v State of U.P. (Allahabad High Court, Lucknow Bench, Writ Tax No. 1024 of 2026, 9 September 2026), a notice under section 74A alleged that the petitioner’s suppliers were non-existent. No ASMT-10 had been issued. The Court held that section 61 is not “the sole or exclusive gateway” to a demand, following the Andhra Pradesh High Court in Devi Traders (2023). The facts and reasoning are in the guide on ASMT-10 for credit.
A precondition where the demand rests on the returns. In Pepsico India Holdings Pvt Ltd v Union of India (Gauhati High Court, WP© No. 6960 of 2023, 19 September 2025, single judge), a show cause notice under section 73 for 2017-18 demanded Rs 19,51,41,111 of credit. Its sole basis was that the company had not filled in table 14 of GSTR-9C, so its credit appeared unreconciled with its accounts. The department admitted that no ASMT-10 had been issued. The Court held that where the demand rests on a discrepancy found in the returns, the procedure in section 61 and rule 99 “was nonetheless mandatorily required to be followed”. It set the notice aside. It also noted that table 14 had been made optional for 2017-18 to 2022-23 by notification.
The Allahabad High Court in Neelkanth distinguished Pepsico as resting on Goverdhandham, where scrutiny had in fact been started. The department has appealed Pepsico. On 23 September 2026 a Division Bench of the Gauhati High Court condoned a three-day delay in filing the appeal and directed it to be listed on 27 November 2026. The question is therefore open.
What can still be put right
- Before the thirty days end, an admitted amount can be paid through DRC-03 with interest, or corrected in the current return. Once an error is found “as a result of scrutiny”, the ordinary route of correction in a later return under section 39(9) is closed; Correcting Mistakes in Returns explains why.
- If a show cause notice follows, the payment windows in sections 73(8), 74(8) and 74A(8) still apply. The penalty depends on when the payment is made.
- An order that follows can be appealed under section 107, as described in Appeals and Pre-Deposit.
The procedure in order
- Download the ASMT-10 and its worksheets from View Notices and Orders, and note the date of service.
- Reconcile the year’s returns with each other and with the books, GSTR-9, GSTR-9C, e-way bills and GSTR-2A, discrepancy by discrepancy.
- For each item, accept and pay through DRC-03 or the current return, or prepare an explanation with documents.
- Ask the officer for more time before the thirty days end if the reconciliation is not complete.
- File ASMT-11 from the REPLIES tab, with every discrepancy answered and payments shown, verified with DSC or EVC.
- Watch for ASMT-12 on the ORDERS tab. If instead the status shows a recommendation for audit, inspection or a demand, the later guides in this set apply.
The next guide covers assessment of a person who has not filed returns: the GSTR-3A notice, the best-judgment order in ASMT-13, and its withdrawal.