Scrutiny of GST Returns [Section 61 of the CGST Act, 2017]

(1) Communication of Discrepancy Found in Scrutiny and Seeking Explanation Thereto [Section 61(1)]

The proper officer may 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, in such manner as may be prescribed and seek his explanation thereto.

(2) No Further Action is required If Explanation found to be satisfactory [Section 61(2)]

In case the explanation is found acceptable, the registered person shall be informed accordingly and no further action shall be taken in this regard.

(3) Failure to Furnish Satisfactory Explanation or Failure to Take Corrective Measure in Return after Discrepancy is Accepted [Section 61(3)]

In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him or where the registered person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, the proper 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.

Some important FAQ’s on Scrutiny of GST Return released by CBEC on 31.3.2017

Q- What recourse may be taken by the officer in case proper explanation is not furnished for the discrepancy detected In the return filed, while conducting scrutiny under section 61 of CGST ACT ? [ Question No. 5 of FAQ’s ]

Ans. If the taxable person does not provide a satisfactory explanation within 30 days of being informed (extendable by the officer concerned) or after accepting discrepancies, fails to take corrective action in the return for the month in which the discrepancy is accepted, the Proper Officer may take recourse to any of the following provisions:

1. Proceed to conduct audit under Section 65 of the Act

2. Direct the conduct of a special audit under Section 66 which is to be conducted by a Chartered Accountant or a Cost Accountant nominated for this purpose by the Commissioner: or

3. Undertake procedures of inspection, search and seizure under Section 67 of the Act; or

4. Initiate proceeding for determination of tax and other dues under Section 73 or 74 of the Act.