Analysis of risk parameters of scrutiny of GST Returns as per SOP issued by CBIC

S. No

Parameter

Description of Parameter

Remarks

Practical Case Studies

1

Tax Liability on Outward Supplies and short-payment of tax

Tax liability on account of "Outward taxable supplies (other than zero rated, nil rated and exempted)" and "Outward taxable supplies (zero rated)" as declared in table 3.1(a) and table 3.1(b) respectively of FORM GSTR-3B may be verified with corresponding tax liability in respect of outward taxable supplies declared in table 4 (other than table 4B), table 5, table 6, table 7A(1), table 7B(1), table 11A and table 11B (along with the net effect of amendments thereof in Table 9, 10 and 11(II)) of FORM GSTR-1.

(1) Where the tax liability in respect of supplies declared in the

aforementioned tables of FORM GSTR-1 exceeds the liability declared in FORM GSTR-3B, it may indicate short payment of tax. As per SOP, in all cases the Liability in GSTR-3B >= Liability in

GSTR-1.

However, such short-payment of tax may not be true in all cases as is illustrated in the adjacent case study.

(2) Since the GST regime was at a nascent stage during FY 2017-18 and 2018-19, there could be genuine cases of mismatch in information of outward

supplies and output tax reported in GSTR-1 and GSTR-3B. A lenient stance should be adopted by the Department.

(1) Mr. Aakash, a registered person has made outward supply of ₹ 15L in the month of December, 2021 to Mr. Prateek. A purchase return of an amount of Rs.3L was made by Mr. Prateek to Mr. Aakash in March 2022. Mr. Aakash could not report Credit note (CDN) of Rs. 3L in GSTR-3B of March 2022 since there were no outward supplies for the said month against which the CDN could be adjusted even though he has reported such CDN in GSTR-1 for

March 2022.

The said CDN may be reported in GSTR-3B of April 2022, provided there is enough outward supplies for April 2022. Therefore, for F.Y. 2022-23, the Liability in GSTR-3B< Liability in GSTR-1 and as per the SOP a scrutiny notice may be issued even though this is not a case of short payment of tax and an appropriate reply along with sales reconciliation has to be provided.

(2) In case due to a clerical mistake in reporting outward supplies in Table 3.1(a) or Table 3.1(b) in GSTR-3B of March 2022 by

mistakenly reporting Rs. 30,000 instead of the correct amount of Rs. 3,00,000 would create a difference of Rs. 2,70,000 against the correct amount of Rs. 3,00,000 reported in GSTR-1 in F.Y. 2021-22. Also, in case the difference of Rs. 2,70,000 of outward supplies is reported in GSTR-3B of April 2022, whereas no such amount shall be reported in GSTR-1 of April 2022, would again create a difference between outward supplies reported between GSTR-3B and GSTR-1 in F.Y. 2022-23. Therefore, as per the SOP, there may be a scrutiny notice issued for short payment of tax in GSTR-3B of March 2022 even though there may be an inadvertent clerical

error.

2

Tax Liability on Inward Supplies (RCM) and Input Tax Credit claimed under RCM

a. ITC availed in Table 4(A)(2) and Table 4(A)(3)

of Form GSTR-3B

Note - ITC availed cannot exceed Cash paid under RCM in Table 3.1(d) of Form GSTR-3B

b. ITC in respect of inward supplies attracting reverse

charge as appearing in Table 3 and Table 5, net of amendments in Table 4 and Table 6, of FORM GSTR-2A

Note - RCM paid as per GSTR 3B cannot be less than RCM populated in GSTR 2A

Availment of ITC in excess of the liability discharged on account of reverse charge supplies may indicate either short payment of tax liability on account of RCM supplies or excess availment of input tax credit in respect of RCM supplies. Therefore, as per SOP, in all cases, Liability in 3.1(d) >= ITC in 4(A)(3). However, the same may not be true in all case as is illustrated in the adjacent case study.

Details of such inward supplies from URD persons are not communicated in FORM GSTR-2A, as only registered persons furnish FORM GSTR-1.

Moreover, details of ITC on account of import of services also are not communicated in FORM GSTR-2A. As such, the RCM supplies declared in table 3.1(d) of FORM GSTR-3B cannot be less than the inward supplies attracting RCM as available in FORM GSTR-2A. However, the same may not be true in all case as is illustrated in the adjacent case study.

(1) Mr. Bikash has paid tax under RCM of Rs. 50,000 and reported in table 3.1(d) of GSTR-3B of March, 2022 and since, he usually claims the corresponding ITC under RCM in Table 4(A)(3) in GSTR- 3B of the next month, say, in the given case it shall be, GSTR-3B of

April 2022. Therefore, he shall claim such ITC under RCM of Rs. 50,000 by reporting it in Table 4(A)(3) of GSTR-3B of April, 2022 and corresponding tax payment under RCM shall not be reported again in Table 3.1(d) of GSTR-3B of April, 2022. Therefore, for the month of April 2022 in F.Y. 2022-23, amount of ITC under RCM reported in Table 4(A)(3) shall be greater than tax paid under RCM in Table 3.1(d) of the same month. Therefore, as per the SOP, there may be a scrutiny notice issued for short payment of tax under RCM or excess claim on ITC under RCM for F.Y. 2022-23.

(2) Ms. Shilpa has made taxable outward supplies of Rs. 1,00,000 to Ms. Ankita in March 2022. Ms. Shilpa has mistakenly reported such supplies in Table 4B instead of Table 4A of GSTR-1 of March 2022 and consequently column 14 of Table 3 of GSTR-2A of Ms.

Ankita is updated with ‘Yes" stating that such inward supplies attracted RCM whereas it should have been "No". As a result of this, the inward supplies attracting RCM as per GSTR-2A shall be greater than tax liability under RCM reported as per Table 3.1(d) of GSTR-3B of March 2022. Therefore, as per the SOP, there may be a scrutiny notice issued for short payment of tax under RCM for F.Y. 2021-22.

S. No

Parameter

Description of Parameter

Remarks

Practical Case Studies

2

Tax Liability on Inward Supplies (RCM) and Input Tax Credit claimed under RCM

c. Tax/Cess paid in cash as per column 8 of Table 6.1

of FORM GSTR-3B

In respect of inward supplies liable to RCM, tax/cess is to be paid in cash. Besides such RCM payments in cash, there may also be other payments in cash by the registered person i.e. Cash payment as per Rule 86B. In any case, tax liability off-set in cash should not be less than the liability arising on account of reverse charge as per table 3.1(d) of FORM GSTR-3B.

Where the tax liability off-set in cash is less than the liability arising on account of reverse charge, it may indicate short payment of tax.

3

ITC on Inward Supplies from ISD

ITC availed in respect of "Inward supplies from ISD" in Table 4(A)(4) of

FORM GSTR-3B may be verified with Table 7 (along with the net effect of amendments thereof in Table 8) of FORM

GSTR- 2A.

As per the SOP, in every case, the Input Tax Credit as per Table 4(A)(4) <= Input Tax Credit appearing in Table 7 of GSTR- 2A.

S. No

Parameter

Description of Parameter

Remarks

Practical Case Studies

4

Excess Claim of ITC in GSTR3B V/s GSTR2A. (ITC on All other ITC)

ITC availed in respect of "All other ITC" in Table 4(A)(5) of FORM GSTR-3B may be verified with Table 3 and Table 5 (along with the net effect of amendments thereof in Table 4 and Table 6 respectively) of FORM GSTR-2A.

Tables 3 and 5 in FORM GSTR-2A contain details of supplies attracting forward as well as reverse charge. Therefore, only the supplies against which there is "No" or "N" in column 14 of Table 3, column 16 of

Table 4, column 15 of Table 5 and column 18 of Table 6 may be considered.

Therefore, as per the SOP, ITC as per Table 3 and Table 5 of GSTR-2A should be greater than ITC claimed in Table 4(A) (5) of GSTR-3B. However, the same may not be true in all case as is illustrated in the adjacent case study.

Such ITC appearing in GSTR-2A may be greater than ITC to be claimed in Table 4(A)

(5) of GSTR-3B in usual situations, such as when ITC appearing in GSTR-2A may

contain blocked Credit u/s 17(5), however, the ITC to be claimed in Table 4(A)(5) of GSTR-3B should not contain such a ITC.

It may be noted that there was no requirement of matching ITC claimed in Table 4(A)(5) of GSTR-3B with GSTR-2A for FY 2017-18 and FY 2018-19.

Reliance can be placed on the Press release dated 18.10.2018 and the judgment of Hon'ble Gujarat High Court in M/s. NEW NALBANDH TRADERS vs. STATE

OF GUJARAT & 2 other(s).

(1) Mr. Raju Prasad has purchased some goods from Mr. Shankar having business in Bihar. Goods had been dispatched by Mr. Shankar as on 31-03-2022 and the tax invoice had been raised as on 31-03-2022. Mr. Shankar reports the tax invoice on this outward supply in his GSTR-1/IFF for the month of March 2022. Since the goods have been received by Mr. Raju Prasad as on 03-04-2022, he is bound to claim such ITC only in the month

of April 2022 due to the condition of claiming ITC as per Sec 16(2)(b) of CGST Act. Therefore, in regard to F.Y. 2022-23, ITC claimed in Table 4(A) (5) All Other ITC > ITC as per Table 3 & 5 (GSTR-2A), even though it is not a case of excess claiming of ITC. Therefore, as per the SOP, there may be a scrutiny notice issued for excess claiming of ITC for F.Y. 2022-23.

(2) M/s. Maa Kaali Transport, GTA, has provided Goods Transport Agency services of Rs. 1,50,000 to M/s. Rio Sales Pvt. Ltd. in December 2021 but mistakenly an invoice of Rs. 1,75,000 was issued and uploaded in his GSTR-1 then. Now, a downward

amendment of Rs. 25,000 is required to be reported in Table 9A-Amended B2B invoices in March 2022 but mistakenly it has been reported incorrectly and consequently column 16 of Table 4 of GSTR-2A of M/s. Rio Sales Pvt. Ltd. is updated with ‘No" stating that such inward supplies of GTA did not attract RCM whereas it should have been "Yes". As a result of this, the inward supplies not attracting RCM as per Table 3, net of amendments in Table 4, of GSTR-2A shall be lower than the ITC claimed in Table 4(A)(5) of GSTR-3B of March 2022.

Therefore, as per the SOP, there may be a scrutiny notice issued for excess claiming of ITC for F.Y. 2021-22.

S. No

Parameter

Description of Parameter

Remarks

Practical Case Studies

5

Short Payment of Tax in case of TDS/TCS Deduction.

Outward supply in GSTR-3B vs. TDS and TCS Credit

The taxable value declared on account of "Outward taxable supplies in Table 3.1(a) of FORM GSTR-3B should not be less than the net amount liable for TCS and TDS credit as per Column 6 of Table 9 of FORM GSTR-2A.

The details of TDS and TCS are furnished in their FORM GSTR-7 and FORM GSTR-8

respectively and communicated to the registered person in table 9 of FORM GSTR- 2A.

However, the taxable value declared on account of Outward taxable supplies in FORM GSTR-3B cannot be less than the net amount liable for TCS and TDS credit as per FORM GSTR-2A.

A discrepancy on the aforementioned count may indicate short payment of tax.

(1) Mr. Mahesh is a Government supplier and making a supply of Rs. 2 Crore with 18% GST in the month of March 2022 under a contract with Government. Payment made by Government Department is Rs. 1.18 Cr. inclusive of GST to Mr. Mahesh for

the month of March 2022. TDS has been deducted by Government department @ 2% i.e Rs. 4L on Rs. 2 Cr. supply for the month and the same has been shown in their GSTR-7. On the other hand Mr. Mahesh has shown outward supply of Rs. 1 Cr for the month of March 2022.

In the above situation there is a short payment by Mr. Mahesh of 18% GST on Rs. 1 Cr since the TDS @ 2% was deducted on the entire contact value of Rs. 2 Cr by the Government and Mr. Mahesh shall have to pay an additional GST Rs. 18L out of his pocket.

(2) Mr. Sanjeet issues a Tax Invoice of Rs. 10,00,000/- with GST of Rs. 1,80,000/- for supplies made to Government. The Govt. department should have deducted TDS on Rs. 10,00,000/- but mistakenly it was deducted on Rs. 11,80,000/-. In such a case difference in taxable value of outward supplies shall be present in GSTR-3B and GSTR-7. In such a case, scrutiny notice may be issued for mismatch and reply will have to be furnished for the same. In these cases, Mr. Sanjeet shall also have to follow up the Government Department for a rectification in GSTR-7.

(3) Mr. Tapas, a contractor, has reported in GSTR-3B of March 2022, the outward supplies of Rs. 50L made to a Government Department in the same month. However, the Govt. Department doesn't deduct the TDS @ 2% on Rs. 50L at the time of credit of account in March, 2022 but deducts TDS in April 2022 when it makes the payment to the contractor and declares in GSTR-7. Therefore, assuming there is no outward supplies to be reported in GSTR-3B of April, 2022, the taxable outward supplies reported in GSTR-3B of April 2022 may be lower than the net amount liable for TDS as per Form GSTR-2A.