The Goods and Services Tax (GST) framework has always emphasized compliance, transparency, and accountability. Recently, a surge in the issuance of Form GST ASMT-10 notices has been observed, particularly to investigate discrepancies in input tax credit (ITC) between various GST returns for the financial year 2020-21. Taxpayers are being scrutinized for differences between GSTR-2A and GSTR-3B, GSTR-9, and GSTR-9C.
These notices demand taxpayers reconcile mismatches and substantiate their claims with proper documentation and reconciliations. For those who can satisfactorily explain discrepancies with supporting evidence, the inquiry often ends without further action. However, the stakes remain high for those who fail to address these discrepancies effectively.
Understanding Form GST ASMT-10
Form GST ASMT-10 is issued by the GST department when any tax liability mismatch is detected, typically through automated or manual analysis of filed returns. It serves as a precursor to more formal proceedings, giving taxpayers an opportunity to clarify and reconcile any differences.
For the financial year 2020-21, the most common reasons for these notices include:
- Mismatch between GSTR-2A and GSTR-3B: GSTR-2A reflects the ITC reported by suppliers, while GSTR-3B includes the ITC claimed by the taxpayer. Any variance often triggers suspicion.
- Inconsistencies in GSTR-9 and GSTR-9C: Annual returns (GSTR-9) and audit reports (GSTR-9C) must align with the monthly/quarterly returns.
- ITC overclaims or unreported liabilities: Situations where taxpayers inadvertently claimed ITC beyond the supplier’s reported output tax.
Timelines for Issuance of Show Cause Notices and Orders under Section 73
Under Section 73 of the CGST Act, the timelines for notices and orders for non-fraudulent cases are critical:
- Time Limit for Issuance of Show Cause Notices (SCN): Notices under Section 73 must be issued within 2 years and 9 months from the due date of filing the annual return for the relevant financial year.
- Time Limit for Passing Orders: Orders under Section 73(10) must be issued within 3 years from the due date of filing the annual return.
For the financial year 2020-21, the annual return filing deadline was 28th February 2022, making the SCN issuance deadline 28th November 2024, and the order issuance deadline 28th February 2025.
Why the Sudden Increase in Notices?
The nearing deadline for issuing SCNs has prompted GST officials to expedite their investigations. In many cases, they are racing against time to identify mismatches, issue notices, and close inquiries. Taxpayers should expect a potential bombardment of SCNs in the coming months, as officials aim to meet compliance targets within the statutory time limits.
Preparing for the Challenges Ahead
Taxpayers need to be proactive in managing and reconciling their returns. Here’s how to stay ahead:
- Conduct a Thorough Reconciliation: Regularly compare ITC as per GSTR-2A with what is claimed in GSTR-3B. Identify and resolve discrepancies early.
- Review Annual Returns: Ensure that GSTR-9 and GSTR-9C accurately reflect the data filed in monthly/quarterly returns.
- Maintain Robust Documentation: Proper invoices, ITC records, and reconciliations should be readily available to substantiate claims.
- Respond Promptly to Notices: If you receive a Form GST ASMT-10, respond within the prescribed timeline with adequate explanations and documents.
- Engage Professionals: Seek assistance from tax consultants or GST professionals like chartered accountant to address complex queries and ensure compliance.
Final Thoughts
As the deadline for issuing SCNs under Section 73 approaches, the tax authorities are intensifying their scrutiny of ITC claims. While this may seem daunting, proactive measures and robust documentation can help taxpayers navigate this wave of inquiries. Prepare to face detailed queries and ensure your records are in order to minimize exposure to liabilities and penalties.
Stay vigilant, stay compliant, and be ready to address any GST-related concerns!
