Navigating the intricacies of indirect taxation in India can be a daunting task. In India, the GST regime has brought significant changes to the tax landscape, requiring taxpayers to adhere to a range of compliance procedures. One such crucial document is Form GST ASMT-10. In this blog, we will unravel form GST ASMT in detail, understand its content and learn how to file a response.

What is Form GST ASMT – 10?

When discrepancies or inconsistencies are identified in the GST returns filed by a taxpayer, tax authorities issue a significant notice known as GST ASMT-10. This notice serves as a formal communication tool, notifying the taxpayer about the identified discrepancies and providing an opportunity to seek clarification or rectification of any errors.

According to Section 61 of the CGST Act, 2017, along with Rule 99 of the CGST Rules, 2017, GST officers have the power to review returns based on specific risk factors. It’s important for taxpayers to understand GST ASMT-10 so they can comply with the rules and promptly address any issues found in their returns.

Background

Under the GST Act, the authority to assess taxes lies with the taxpayer and not with the revenue department. According to Section 59 of the CGST Act, every registered person must calculate and declare their tax liability in their returns for each tax period, as specified in Section 39.

However, there are three situations in which the power of assessment is given to the revenue department:

• Provisional Assessment under Section 60: This allows for an assessment of taxes to be done on a temporary basis when the actual value or tax liability cannot be determined accurately.
• Assessment of Non-Filers of Return under Section 62: In cases where a taxpayer fails to file their return, the revenue department can conduct an assessment to determine the tax liability.
• Assessment of Unregistered Persons under Section 63: The revenue department has the authority to assess the tax liability of individuals or businesses who are not registered under the GST Act.

Once a taxpayer files their return, they have self-assessed their taxable value and tax liability. No one else can reassess their tax liability. However, the proper officer, as defined in Section 61, has the power to scrutinize the return filed by the taxpayer to ensure its accuracy.

Scrutiny of Return U/s 61

Under Section 61 of the CGST Act, the tax authority has the power to scrutinize the returns and related information provided by registered taxpayers. They can check for any errors or discrepancies and inform the taxpayer about them. If the taxpayer provides an acceptable explanation or resolves the issues within 30 days or as permitted, no further action is taken.

However, if the taxpayer fails to provide a satisfactory explanation or does not correct the discrepancies in their return, the tax authority can initiate appropriate actions, such as under Section 65, 66, or 67, or determine the tax and other dues under Section 73 or 74.

In cases where discrepancies or inconsistencies are found in a taxpayer’s GST returns, the tax authorities issue a notice called GST ASMT-10.

Why is form GST ASMT-10 Issued?

Form GST ASMT-10 is issued under the authority of Section 61 of the CGST Act, 2017, read with Rule 99 of the CGST Rules, 2017. The rule does not specifically outline a comprehensive list of discrepancies that can trigger the issuance of GST ASMT-10. Hence, the proper officer has the authority to issue Form GST ASMT-10 for any discrepancy observed by them during the assessment process.

Tax authorities may issue a GST ASMT-10 notice to a taxpayer for various reasons. Here are some common scenarios that can lead to the issuance of such a notice:

1. Mismatch in Input Tax Credit (ITC): When there is a discrepancy between the ITC shown in GSTR-2A/ GSTR 2B (auto-populated data) and the ITC claimed in GSTR-3B (self-declared), a GST ASMT-10 notice may be issued.
2. Mismatch in Tax Liability: If there is a difference between the tax liability reported in GSTR-1 (outward supplies) and GSTR-3B (self-assessed tax liability), a GST ASMT-10 notice may be sent to the taxpayer.
3. Non-filing or Delayed Filing of Returns: Failure to file GST returns or delayed submission can trigger the issuance of a GST ASMT-10 notice from the tax authorities.
4. Discrepancy between E-Way Bill and GSTR-3B: When there is a difference between the tax liability reported in the E-Way Bill system and the tax liability declared in GSTR-3B, a GST ASMT-10 notice may be issued.
5. Purchases from Cancelled or Suspended Dealers: If a taxpayer has made purchases from a dealer whose GST registration has been canceled with retrospective effect or suspended, it may lead to the issuance of notice.
   You can also read: GST Registration Cancellation
6. Suspected Fake or Bogus Dealers: If a taxpayer has made purchases from dealers suspected to be fake or bogus, the tax authorities may issue a GST ASMT-10 notice for further investigation.

It’s important for taxpayers to understand these potential reasons for receiving a GST ASMT-10 notice to ensure compliance and address any discrepancies or issues promptly and accurately.

What is the format of ASMT-10?

Essential Information:

• GSTIN (GST Identification Number)
• Name and Address of the individual or business entity
• The tax period for which the notice is issued

Observed Discrepancy:

• Description of any identified discrepancy, along with a request for an explanation
• Tax amount associated with the deviation

Tax Officer’s Details:

• DIN (Director Identification Number) of the tax officer
• Name, Signature, and Designation of the tax officer issuing the notice

How to file a response to form GST ASMT-10?

If you receive a notice called GST ASMT-10, you need to respond within 30 days. There are two possible situations:

1. If you agree with the discrepancies mentioned in the notice:

• Pay the tax amount, interest, and penalty mentioned in GST ASMT-10.
• Use Form DRC-03 to make the payment. Make sure to select the correct section.
• You can pay the amount using your available tax credits or in cash.
• Inform the tax officer by filling out Form GST ASMT-11 and provide a copy of GST DRC-03 to show that you’ve made the payment.
• You can pay the tax using Form DRC, report it in your GSTR1, or pay it while filing GSTR-3B.

2. If you disagree with the discrepancies mentioned in the notice:

• Fill out Form GST ASMT-11 and explain why you disagree, providing detailed explanations and supporting documents such as GST returns, certificates, invoices, receipts, and bank statements.

What is the procedure after you’ve filed your reply?

If the tax officer is satisfied with your reply, they will issue an order called GST ASMT-12 stating that your reply is satisfactory, and the proceedings are dropped.

If the tax officer is not satisfied, they may take further action i.e. 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 under section 65, 66, 67 or 73 & 74.

There is no specific timeline for receiving the GST ASMT-12 order.

Note: It’s important to know that GST ASMT-10 is not a show-cause notice. It’s a communication that points out discrepancies in your GST returns and the corresponding GST amount you need to pay as penalty. If you handle this notice properly, the proceedings will end at this stage. However, if you don’t address the concerns raised, a show-cause notice in Form GST DRC-01 will be issued.

So, as a taxpayer, it’s crucial to respond to GST ASMT-10 carefully. First, understand the reasons why it was issued, and then file a reply accordingly.

Handling Specific Case Scenarios:

The output liability in GSTR-1 and GSTR-3B differs

Taxpayers should first perform a tabular reconciliation of the monthly output and turnover recorded in GSTR-1 and GSTR-3B to see whether there are any discrepancies.
Due consideration should be given to modifications, the credit note, and the debit note while writing the reconciliation.

When comparing GSTR-1 and GSTR-3B, the System of GST department frequently ignores revisions, credit notes, and debit notes. So, with specific responses, discrepancies brought on by system errors can be rectified.

More ITC was claimed in GSTR-3B than was found in GSTR-2B/GSTR-2A

In order to determine whether the party has failed to file the GST return on time, the assessee must undertake a party-by-party and invoice-by-invoice reconciliation of the ITC shown in GSTR-2A/2B and ITC claimed in GSTR-3B.

If the problem relates to the fiscal years 2017–2018 or 2018–2019, please refer to Circular No. 183/15/2022–GST. It is dated December 27, 2022. In cases where the supplier has not reported sales in GSTR-1, this Circular outlines the different actions that the assessee may take.

If any tax is required as a result of the supplier’s inaccurate reporting, the assessee may recover it from the supplier together with interest.

With retroactive effect, purchases from dealers were canceled

The GST department is canceling GST registrations of some suppliers, and as a result, buyers who purchased from these suppliers are receiving notices from the GST department stating that their Input Tax Credit (ITC) has been taken from canceled firms.

In such a situation, if you have received a GST ASMT-10 notice, you should contact the supplier and ask them to cancel their GST registration. Additionally, you can provide a detailed response to the proper officer explaining that your purchase was genuine.

To support your claim, you can provide documents such as a copy of the purchase invoice, lorry receipt (if applicable for goods), stock register, e-waybill, and bank statement showing that payment was made within 180 days. It’s important to know that there have been court judgments stating that ITC cannot be denied solely based on the retrospective cancellation of the supplier’s GST registration. However, the transactions for which ITC has been claimed must be genuine.

In conclusion, taxpayers should navigate the complexities of Form GST ASMT-10 with diligence, providing accurate information and supporting documentation to safeguard themselves.