GST Input Tax Credit and Output Tax in CGST Act 2017

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Section 2(82) of CGST Act, outputtax in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis. 3

'Input Tax Credit' or 'ITC' means the Goods and Services Tax (GST) paid by a taxable person on any purchase of goods and/or services that are used or will be used for business. ITC value can be reduced from the GST payable on the sales by the taxable person only after fulfilling some conditions. Conditions are Taxpaying documents such as tax invoice, debit note etc., Goods / service should have been received/deemed to be received by the taxable person 4

Tax charged on the invoice and should have been paid to the credit of government. Return should have been furnished by the tax payer. Credit for goods against an invoice received in lots / instalments can be availed only on last lot in instalment. The timelines for entitlement of credit against a particular invoice shall lapse on the expiry of one year from date of issue. FURTHER Ineligible / Blocked Credit shall be reversed as per Section 17(5) of the Act. Input Tax Credit shall be reduced/reversed attributable to exempt supplies as per Rule 42 & 43. Refund on account of zero rate supplies or inverse duty structure. 5

TO BE FILED MAINLY GSTR 1 GSTR 3B RFD 01 FOR REFUND IF ANY GSTR 9 IF APPLICABLE GSTR 9C IF APPLICABLE TO BE VERIFIED GSTR 2A TABLE 8A 6

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Section 61 of CGST Act, 2017 contains the provisions of scrutiny of GST returns which empowers proper officer to scrutinize the return and related particulars furnished by the taxable person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in a manner as may be prescribed. Scrutiny means a critical examination of the any paper/returns/documents etc. submitted. 8

Proper officer can scrutinize the returns for its correctness It is non compulsory Pre-adjudication Process It is not mandatory to Scrutinize the returns by the Proper officer. Scrutiny is not a legal or judicial proceedings as no order can be passed. Officer will ask for the explanation for the discrepancies observed. Proper Officer may issue SCN if required by issuing DRC - 01. 9

Rule 99 of the CGST Rule 2017 provides for manner of scrutiny of returns. It is preferably based on robust risk parameters. To verify the correctness of the information available with the proper officer in various returns and statements furnished by the dealer and comparison of Data with available from various sources like DGARM, ADVAIT, GSTIN, E-way Bill Portal etc. Informing RP of discrepancies noticed in ASMT - 10, if any, along with quantification of amount of tax, interest and any other amount payable in relation to such discrepancy. RP either agrees to the discrepancies observed and pay the tax, interest and any other amount and conclude the proceedings or submit the explanation regarding observation made by proper officer in ASMT - 11. Where no proper explanation to the satisfaction to the proper officer and/or non payment of tax, interest or any other amount payable, proper office initiate action under section 65 or 66 or 67 or determination of tax and other dues under section 73 or 74 of the CGST Act and close the proceedings by issuing ASMT 12 (Note: There is no time line for issued of ASMT -12) 10

SECTION 65 CGST ACT ORDERS FOR AUDIT BY TAX AUTHORITIES SECTION 66 CGST ACT ORDERS FOR SPECIAL AUDIT SECTION 67 OF THE CGST ACT INITIATE ISPECTION, SEARCH AND SEIZURE SECTION 73 OF THE CGST ACT DETERMINATION OF TAX NOT PAID OR SHORT PAID SECTION 74 OF THE CGST ACT DETERMINATION OF TAX NOT PAID SHORT PAID BY REASON OF FRAUD OF WILL FULL MISSTATMENT. 11

RP, who has not filed returns/delayed filling returns viz. GSTR 9 or 9C HSN Code of Purchase and Sales are not matching Difference in Where Claim of ITC is availed against Unreasonable, excessive and illegally inflated purchases of goods and services from any GST dealer Where Claim of ITC is availed against the purchases of Goods and Services from the related parties beyond (exceeding) the Arm Length Price (ALP) ITC not available or Utilized excessively. Utilization of ITC which are blocked Credit. Purchases from dealers who are suspected to be fake or bogus. Non reversal of ITC under Rule 42 or 43 12

Refund Wrongly Claimed Purchases from dealers whose registration is cancelled with retrospective effect or whose registration is suspended. RCM not paid properly on domestic as well as overseas transactions. Mismatch in GSTR 1 and GSTR 3B Mismatch in GSTR 2A and GSTR 3B for ITC claimed. 13

Guidelines for scrutiny of GST Returns for FY 2017-18 and FY 2018-19 CBIC has issued Instruction No. 2/2022 Dated22.03.2022 containing SOP for Scrutiny of GST Returns Under Section 61 of the CGST Act 2017 read with Rule 99 of the CGST Rues 2017 for the financial year 2017-18 and FY 2018-19 14

Guidelines for scrutiny of GST Returns for FY 2019-20 onwards CBIC has issued Instruction No. 2/2023 Dated 26.05.2023 containing SOP for Scrutiny of GST Returns Under Section 61 of the CGST Act 2017 read with Rule 99 of the CGST Rues 2017 for the financial year 2017-18 and FY 2018-19 15

GUIDELINES CONTAINS Selection of Returns and communication of the same for field formations Scrutiny Schedule Process of Scrutiny by the proper officer Timeline for the Scrutiny of the Returns Reporting and Monitoring 16

The requirements have been modified to ensure objectivity and purpose. The progress of the scrutiny exercise as per the scrutiny schedule shall be monitored by Commissioner/Commissioner regular basis. Scrutiny Functionality provided on ACES-GST application only for the Financial Year 2019-20 onwards monitoring and reporting the Principal on has been 17

The online Scrutiny Functionality on ACES GST application will further boosts the efforts of the department to leverage technology and risk based tool to compliance and to conduct scrutiny of the returns interaction with person. encourage self with the minimum registered 18

THANK YOU 19