GST Scrutiny on quarterly basis; CBIC starts with 50,000 taxpayers

GST Scrutiny: The Central Board of Indirect Taxes and Customs (CBIC) has started inspecting the first batch of approximately 50,000 taxpayers for alleged lapses in the 2018 financial year. Field formations have been authorised to open scrutiny of GST identification numbers (GSTINs) based on Artificial Intelligence inputs and risk assessment parameters finalised by the department, following instructions issued by CBIC chief Vivek Johri.

Because FY17-18 was the year that the GST was implemented, these returns are only for the first nine months of the financial year, and they have been opened retrospectively.

“With a view towards enhancing compliance through effective & standardized scrutiny of GST Returns, CBIC has initiated automatic scrutiny process, beginning with the 1st tranche of about 50,000 GST taxpayers for alleged lapses in FY18,” sources told.

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“Directorate General of Analytics and risk management (DGARM) has shared the information with all field formations to begin the process. Directorate General of systems and Data Management which looks after the entire data and DGARM along with their teams, zonal chiefs have been tasked to have the data examined,” sources added.

The examination of GST returns under scanner is based on “uniform model of scrutiny, which is initiated to bring in transparency and enhance compliance to plug tax leakages which remain undetected in the system,” sources added.

CBIC to soon introduce mandatory quarterly scrutiny of GST returns. Scrutiny exercise is aimed at better compliance and enhancement of GST collections,” reported sources. The CBIC would use business intelligence and other enterprise data available to run the quarterly scrutiny, the report said. According to the sources, tax evasion to the tune of Rs 52,000 crore was detected in the period between July 2017 and April 1, 2021.

Following the first tranche, another tranche of GST scrutiny will be opened for FY19, followed by FY20, FY21, and FY22, in order to plug several leaks in the system and ensure that taxpayers do not avoid paying taxes, as the government believes this exercise will do.

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In an interview on April 1, Finance Minister Nirmala Sitharaman stated that the government’s goal is to plug GST leakages through system-generated alerts and better data and artificial intelligence use. This followed by the instructions issued to field formations from CBIC Chairman Vivek Johri, where Johri in his newsletter issued on April 4, to all his officers, across India, said, “With a view towards enhancing compliance through effective and standardized scrutiny of GST returns, the Board has been working towards automating the scrutiny process. Last week, the first tranche of GSTINs selected for scrutiny, on the basis of risk parameters, were shared by Directorate General of Analytics and Risk Management with field formations.”

“This would not have been possible but for the focused attention and hard work devoted to the project by Member (GST), the GST Policy wing, Pr. Director General, Directorate General of systems & Data Management and DG, DGARM and their respective teams. Zonal chiefs may like to have the data examined and suitable taken up as per the prescribed SOP in a time bound manner. They should not hesitate in providing feedback/ suggestions for improvement.” she added.

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Sources further shared that some of the SoPs or risk parameters that have been used to identify these 50,000 GSTINs for scrutiny include, “Taxpayers showing significant turnover and not chosen for audit, mismatch in supplies of the taxpayers, tax liability and input tax credit between the GST Returns 1, 3B and 2A are showing a mismatch, among others.”