The Goods and Services Tax system in India brought with it a robust framework for compliance and monitoring. Among the various mechanisms adopted to ensure proper reporting and tax payment, the process of scrutiny of returns holds a significant place. The law empowers tax officers to carefully analyze the returns filed by taxpayers and detect mismatches, discrepancies, or possible tax evasions. Scrutiny under Section 61 of the CGST Act, 2017, combined with the procedural requirements under Rule 99 of the CGST Rules, is formalized through notices in Form ASMT-10. This article explains in detail the legal framework, forms, procedures, and judicial interpretations connected with scrutiny of returns.
Notices and Adjudication under GST
The GST law provides for a range of notices that may be issued to taxpayers for different kinds of non-compliance. Each notice serves a specific purpose and has a distinct form prescribed under the rules.
Notice to Return Defaulters – Section 46
Where a registered person fails to furnish a return under Section 39, 44 or 45, the proper officer issues a notice in Form GSTR-3A. This is a reminder to the taxpayer to furnish the return within fifteen days. Failure to comply can lead to the best judgment assessment.
Notice for Cancellation of Registration – Form REG-17
If a registered person violates provisions of GST law, such as non-filing of returns for six months or availing ineligible input tax credit, the officer may issue Form REG-17 requiring the person to explain why registration should not be cancelled.
Scrutiny of Returns – Form ASMT-10
This notice is issued where the officer finds discrepancies upon examination of returns. The taxpayer is required to either accept the discrepancy and pay the liability or provide an explanation through Form ASMT-11.
Summons – Section 70
Officers have the power to summon persons to give evidence or produce documents as part of any inquiry. Summons proceedings are akin to those before a civil court.
Detention of Goods and Vehicles – Section 129
When goods are transported in contravention of the provisions, they may be detained or seized. Notices under this section typically relate to e-way bill violations.
Show Cause Notices – Sections 73 and 74
When discrepancies are not resolved through scrutiny or voluntary compliance, the department may issue a demand notice under Section 73 for non-fraud cases or Section 74 for cases involving fraud, suppression, or willful misstatement.
Scrutiny Assessment Process
The process of scrutiny of returns under GST is carefully structured. It begins with the detection of discrepancies and proceeds to explanation, acceptance, or initiation of further proceedings depending upon the response of the taxpayer.
Step 1: Issue of Notice in Form ASMT-10
If the officer detects any mismatch or inconsistency in the return filed by the registered person, a notice is issued in Form ASMT-10. The notice specifies the nature of discrepancy along with the quantification of tax and interest involved.
Step 2: Response of Registered Person
The registered person has two options:
- Accept the discrepancy and pay the liability through Form DRC-03, or
- Furnish an explanation in Form ASMT-11 within thirty days or within such extended period permitted by the officer.
Step 3: Acceptance or Rejection of Reply
If the explanation is found satisfactory, the officer communicates acceptance in Form ASMT-12 within thirty days. If the reply is unsatisfactory or no reply is filed, the officer may initiate further proceedings under Sections 65, 66, 67, 73 or 74.
This flow ensures that taxpayers are given adequate opportunity to clarify before escalation to audit, inspection, or demand.
Section 61 of CGST Act, 2017 – Scrutiny of Returns
Section 61 empowers the proper officer to scrutinize returns and related particulars to verify correctness. The law lays down two important obligations:
- Discrepancies must be communicated to the taxpayer.
- Taxpayers must be given an opportunity to explain.
If the explanation is acceptable, no further action is taken. If not, proceedings such as audit under Section 65, special audit under Section 66, inspection and search under Section 67, or demand under Sections 73/74 may follow. Thus, Section 61 acts as the first level of verification before more serious measures are undertaken.
Rule 99 of CGST Rules, 2017
The procedural framework for scrutiny of returns is detailed in Rule 99. The key points are:
- Notice is issued in Form ASMT-10 specifying discrepancies.
- Taxpayers may accept the discrepancy and pay tax along with interest through Form DRC-03.
- Alternatively, the taxpayer can submit a reply in Form ASMT-11.
- If the reply is satisfactory, the officer issues Form ASMT-12 communicating acceptance.
- If unsatisfactory, further proceedings may be initiated under relevant sections of the Act.
This rule ensures procedural fairness by mandating specific forms and timelines.
Common Instances Where ASMT-10 is Issued
Scrutiny notices are usually triggered by system-based data analysis and risk parameters. Some common instances are:
- Mismatch of input tax credit between GSTR-3B and GSTR-2A/2B.
- Differences between outward supply reported in GSTR-1 and liability declared in GSTR-3B.
- Availment of input tax credit on blocked credits under Section 17(5).
- Liability mismatches between e-way bill data and GSTR-3B.
- ITC claimed on fake invoices.
- Returns showing exempt or nil rated supplies while ITC is claimed.
These issues often arise due to errors in return filing, system mismatches, or deliberate evasion.
Flow of Scrutiny under Section 61 and Rule 99
The chronological flow of events under scrutiny provisions can be summarized as follows:
- The officer scrutinizes the returns filed by the taxpayer.
- If discrepancies are found, notice in Form ASMT-10 is issued along with quantification of tax and interest.
- Taxpayers may either accept and pay the discrepancy or furnish an explanation in Form ASMT-11.
- If the explanation is accepted, Form ASMT-12 is issued within thirty days.
- If no reply is filed or the explanation is unsatisfactory, the officer initiates further proceedings under audit, special audit, inspection, search, or demand notices.
This flow ensures that every taxpayer is given an adequate chance to respond before escalation.
Judicial Pronouncements on Scrutiny of Returns
Judicial interpretations have clarified the scope and limitations of scrutiny notices.
Marvel Associates v. State Tax Officer (Kerala High Court, 2023)
The taxpayer failed to respond to ASMT-10 and also did not utilize the option of rectification under Section 39(9). The Court dismissed the petition observing that negligence cannot be condoned.
Section 74 Proceedings Independent of Section 61
It has been clarified that proceedings under Section 74 are independent because the section begins with the phrase “where it appears to the proper officer”. Thus, scrutiny under Section 61 is not a precondition for invoking Section 74.
Tamil Nadu GST Case
In this case, the court held that issues raised in Form DRC-01 and DRC-07 must match the discrepancies raised in ASMT-10. If not, the proceedings would be invalid. This reinforces the principle of adherence to procedure.
These cases highlight that scrutiny is not a mere formality but a mandatory step that must comply with the prescribed process.
Instructions on Scrutiny of Returns
To bring uniformity and efficiency in the process, the CBIC has issued detailed instructions.
Instruction No. 02/2022-GST dated 22.03.2022
This instruction laid down the Standard Operating Procedure for scrutiny of returns for FY 2017-18 and 2018-19. The process emphasized risk-based selection of taxpayers and specific timelines for completion.
Instruction No. 02/2023-GST dated 26.05.2023
This instruction provided guidelines for scrutiny for FY 2019-20 onwards. The major points include:
- Selection of returns for scrutiny is based on risk parameters determined by DGARM.
- Scrutiny should cover all returns filed for the selected financial year.
- Interaction with taxpayers before issuing ASMT-10 should be minimal.
- Payments made through DRC-03 must be considered while issuing notices.
- Notices in ASMT-10 must be issued electronically through the portal.
- Discrepancies must be specific and quantified.
- Supporting documents and working sheets must accompany ASMT-10.
- Time-bound disposal of cases is required to avoid pendency.
These instructions aim at ensuring consistency across the country and reducing subjectivity.
Mismatch of Input Tax Credit (ITC) under GST
Input Tax Credit is the cornerstone of the Goods and Services Tax regime. The availability of seamless credit was one of the main promises of GST, ensuring that tax paid on inward supplies could be adjusted against outward tax liability. However, the implementation has faced multiple challenges, particularly in the form of mismatches between the returns of suppliers and recipients.
These mismatches often result in the issuance of notices, denial of credit, or initiation of proceedings. The legal framework around ITC mismatches has undergone several amendments, and judicial pronouncements continue to shape the scope of taxpayer rights and departmental powers.
Types of ITC Mismatch
Mismatches occur due to technical issues, clerical errors, or deliberate misreporting. Some common types of mismatches include:
Lack of Matching Mechanism
Originally, Section 42 of the CGST Act provided for a matching mechanism for ITC claims. However, due to the complexities involved, this section was never implemented and was eventually omitted. The absence of real-time matching created scope for mismatches between GSTR-3B and GSTR-2A/2B.
Errors in GSTR-3B
Taxpayers sometimes enter figures in the wrong columns while filing GSTR-3B. For instance, ITC pertaining to capital goods may be reported under input services, leading to discrepancies when compared with GSTR-2A/2B.
B2B Reported as B2C in GSTR-1
Suppliers may mistakenly report a business-to-business transaction as a business-to-consumer transaction in GSTR-1. This results in the invoice not reflecting in the recipient’s GSTR-2A/2B, causing an ITC mismatch.
Supplier’s Registration Cancelled or Restored
When the registration of a supplier is cancelled retrospectively, ITC claimed by the recipient is questioned. If the supplier’s registration is later restored, disputes arise over the recipient’s eligibility during the intervening period.
Wrong Place of Supply Reported
Suppliers may inadvertently mention the wrong state as the place of supply, leading to wrong classification of IGST, CGST, or SGST. This creates credit mismatches for the recipient.
Retrospective Cancellation of Supplier’s Registration
Where a supplier’s registration is cancelled retrospectively, the department often denies ITC to recipients even though the supply was genuine. This leads to litigation over whether bona fide recipients should suffer for supplier’s lapses.
Fake Invoices or Blocked Credits
Cases of issuing invoices without actual supply of goods or services have been rampant. ITC claims that such fake invoices are treated as fraudulent and disallowed. Similarly, blocked credits under Section 17(5) also lead to mismatches.
Restrictions under Rule 36(4)
Till December 2021, Rule 36(4) restricted the availability of ITC to 105 percent of invoices reflected in GSTR-2A/2B. This artificial cap led to mismatches whenever suppliers delayed filing returns.
Amendment – Section 16(2)(aa)
With effect from 1 January 2022, clause (aa) was inserted into Section 16(2). This amendment provides that ITC can be availed only if the supplier has furnished the invoice or debit note in GSTR-1 and it is reflected in the recipient’s GSTR-2B. This essentially shifts the entire burden of supplier compliance onto the recipient, making reflection in GSTR-2B a mandatory condition for availing credit.
This amendment was introduced to curb fraudulent claims and align ITC with actual tax paid to the government. However, it has increased compliance difficulties for genuine taxpayers who have little control over supplier reporting.
Amendment – Section 16(2)(ba)
Another significant amendment, though yet to be notified, is the insertion of clause (ba) into Section 16(2). This provides that ITC would be restricted as per the details furnished in the auto-generated statement under Section 38.
Section 38, as amended, provides for communication of inward supplies and eligibility of credit based on risk parameters of suppliers. Once enforced, this provision will link ITC entitlement to the compliance rating of suppliers, creating a new dimension of challenges for recipients.
Rule 36(4) – Restrictions up to December 2021
Rule 36(4) was introduced to impose a cap on ITC availability. Initially, the restriction was that ITC could not exceed 120 percent of the invoices reflected in GSTR-2A. This was later reduced to 110 percent and finally to 105 percent. The rule was applicable till 31 December 2021, after which it was replaced by the stricter provision of Section 16(2)(aa).
This rule was challenged in various courts for being ultra vires to the Act since the Act did not prescribe such a restriction. However, the government continued its enforcement until the new provision came into force.
Limitation Period for Issue of Show Cause Notices
The GST law prescribes strict timelines for issuance of show cause notices where ITC mismatches are detected. The timelines differ based on whether the case involves fraud or not.
Section 73 – Non-Fraud Cases
Where ITC mismatch arises without fraud, suppression, or willful misstatement, Section 73 applies. The show cause notice must be issued within three years from the due date of furnishing the annual return. For the financial year 2017-18, this timeline was extended till 30 September 2023.
Section 74 – Fraud or Suppression Cases
Where fraud, willful misstatement, or suppression of facts is alleged, Section 74 applies. The notice must be issued within five years from the due date of furnishing the annual return. For the financial year 2017-18, the limitation period extends up to August 2024.
The distinction between Sections 73 and 74 is crucial because of both the extended period of limitation and the higher penalty under Section 74.
Applicability of Extended Period under Section 74
The extended limitation under Section 74 applies only where there is:
- Fraud, or
- Willful misstatement, or
- Suppression of facts to evade tax.
The burden of proof lies on the department to establish these elements. Merely detecting a mismatch in ITC without showing intent to evade is insufficient to invoke the extended period. Courts have consistently insisted that extended limitations must be applied strictly and only when clear evidence of fraud or suppression exists.
Case Law Highlights on ITC Mismatch
Judicial decisions have played a significant role in clarifying the treatment of ITC mismatches.
Mahendra Feeds v. State Tax Officer (Madras High Court, 2022)
The taxpayer challenged the denial of ITC based on supplier default. The Court held that where ITC mismatch is alleged, the burden lies on the taxpayer to show that the supplier has actually paid tax to the government. Since the taxpayer could not prove this, the petition was dismissed.
Bharti Airtel Ltd. v. Union of India (Andhra Pradesh High Court, 2021)
The company argued that ITC should not be denied merely because the supplier failed to pay tax. The Court upheld Section 16(2)(c), which makes payment of tax by the supplier a precondition for ITC. The Court reasoned that under GST, unlike the VAT era, credit is not an absolute right but conditional upon supplier compliance.
Other Judicial Pronouncements
Several High Courts have taken the view that denial of ITC to recipients for supplier default is harsh but consistent with the statutory scheme. At the same time, courts have struck down mechanical denial of ITC without proper verification of facts, stressing that genuine taxpayers should not be penalized without evidence of collusion or fraud.
Practical Issues Faced by Taxpayers
Despite the legal framework, taxpayers encounter several practical challenges in dealing with ITC mismatches.
Dependency on Suppliers
Recipients have no direct control over whether suppliers file GSTR-1 correctly and on time. Yet, their eligibility to ITC depends on such compliance, leading to cash flow blockages.
Delayed Reflection in GSTR-2B
Suppliers filing returns belatedly cause ITC to reflect in subsequent months. This creates temporary mismatches and disputes during scrutiny.
Retrospective Cancellations
When supplier registrations are cancelled retrospectively, recipients are suddenly made ineligible for credits already availed. This leads to avoidable litigation and working capital issues.
Fake Invoices
Genuine taxpayers sometimes face notices because they unknowingly dealt with suppliers later found to be non-existent. The challenge is to prove genuineness of transactions through supporting evidence.
Departmental Approach in Handling Mismatches
The department has adopted a data-driven approach to identify ITC mismatches. The common practices include:
- Cross-verification of GSTR-3B with GSTR-2A/2B data.
- Matching outward supply of suppliers in GSTR-1 with inward supply of recipients.
- Using e-way bill data to detect undeclared transactions.
- Tracing high-risk suppliers engaged in fake invoicing.
Based on these checks, notices in Form ASMT-10 are issued, followed by DRC proceedings if discrepancies remain unresolved.
Judicial Pronouncements and Departmental Instructions on Scrutiny of Returns and ITC Mismatches
The scrutiny of returns and mismatches in Input Tax Credit have led to a substantial volume of litigation under the GST regime. Courts have been called upon to interpret provisions, clarify the scope of departmental powers, and balance the rights of taxpayers.
Alongside, the government has issued instructions and standard operating procedures to ensure consistency in handling scrutiny. We focus on judicial pronouncements, departmental guidelines, and the practical implications of dealing with scrutiny notices.
Judicial Pronouncements on Scrutiny of Returns
Judicial decisions provide valuable insight into how scrutiny proceedings under Section 61 of the CGST Act and Rule 99 of the CGST Rules should be carried out. They also underline the rights and obligations of taxpayers.
Marvel Associates v. State Tax Officer (Kerala High Court, 2023)
In this case, the taxpayer failed to respond to the notice in Form ASMT-10 and did not rectify the discrepancies in subsequent returns under Section 39(9). The High Court observed that the taxpayer’s negligence in responding to the scrutiny notice left no scope for relief. The petition was dismissed, affirming that taxpayers must act diligently when discrepancies are pointed out.
Independence of Section 74 Proceedings
Courts have held that proceedings under Section 74 are independent of scrutiny under Section 61 or audit under Section 65. Section 74 begins with the phrase “where it appears to the proper officer…”, allowing the department to invoke this section even without prior scrutiny. This clarifies that scrutiny under Section 61 is not a mandatory precondition for initiating recovery proceedings under Section 74.
Tamil Nadu GST Case on Validity of Discrepancies
The Madras High Court held that discrepancies raised in Form ASMT-10 must match the issues later carried forward in DRC-01 and DRC-07. If the show cause notice is based on grounds not earlier communicated in ASMT-10, the proceedings are invalid. The Court emphasized that the prescribed procedure must be followed strictly to ensure fairness.
Judicial Pronouncements on ITC Mismatches
ITC mismatch has been one of the most contentious issues under GST. Courts have had to balance the conditional nature of ITC with the principle that genuine taxpayers should not be unduly penalized.
Mahendra Feeds (Madras High Court, 2022)
Here, a mismatch was detected because the supplier had not paid the output tax. The Court held that the burden was on the recipient to prove that the supplier had indeed paid tax to the government. As the taxpayer failed to produce such proof, the Court dismissed the petition and upheld denial of ITC.
Bharti Airtel Ltd. v. Union of India (Andhra Pradesh High Court, 2021)
This case challenged the denial of ITC when the supplier defaulted in paying tax. The Court upheld Section 16(2)(c), which makes supplier compliance a condition for availing ITC. It observed that unlike earlier VAT laws, the GST framework explicitly links ITC eligibility to tax payment by the supplier.
Harsh Realities of Supplier Default
Several High Courts have acknowledged that denial of ITC to a recipient due to supplier default is harsh. However, they have reiterated that the statutory provisions are binding. The judiciary has advised that remedies should be sought through representations to the legislature or executive rather than through judicial reinterpretation.
Departmental Instructions on Scrutiny of Returns
To bring uniformity in the scrutiny process, the government has issued detailed instructions to field officers. Two significant instructions provide the framework for scrutiny of returns.
Instruction No. 02/2022-GST dated 22 March 2022
This instruction laid down the standard operating procedure for scrutiny of returns for the financial years 2017-18 and 2018-19. Key aspects included:
- Returns were to be selected by the Directorate General of Analytics and Risk Management based on risk parameters.
- Scrutiny was to cover all returns filed by a GSTIN for the selected year.
- Officers were to minimize direct interaction with taxpayers before issuing ASMT-10.
- Payments already made by taxpayers through Form DRC-03 were to be taken into account while issuing scrutiny notices.
- Discrepancies communicated in ASMT-10 had to be specific, quantified, and supported by documents.
Instruction No. 02/2023-GST dated 26 May 2023
For subsequent years starting from 2019-20, another instruction was issued. This emphasized:
- The use of technology and risk-based selection for scrutiny.
- Uploading of supporting documents and working papers with ASMT-10 notices.
- Issuing notices electronically through the common GST portal.
- Ensuring time-bound disposal of scrutiny cases.
- Avoiding fishing inquiries and focusing only on specific discrepancies identified.
Standard Operating Procedure for Scrutiny
Based on these instructions, the standard operating procedure followed by officers typically involves the following steps:
Selection of Cases
Cases are selected using data analytics tools developed by the risk management wing. These tools flag discrepancies such as ITC claims not matching supplier data, inconsistencies between GSTR-1 and GSTR-3B, or mismatches with e-way bill records.
Issuance of ASMT-10
Once selected, a notice in Form ASMT-10 is issued to the taxpayer. This notice contains the identified discrepancies along with quantification of tax and interest involved. Supporting documents and calculation sheets are attached.
Taxpayer’s Response in ASMT-11
The taxpayer is required to either accept the discrepancy and pay the tax through Form DRC-03 or furnish an explanation in Form ASMT-11 within 30 days (extendable by the officer). The explanation must be supported by documentary evidence.
Officer’s Acceptance in ASMT-12
If the officer is satisfied with the taxpayer’s explanation, a communication in Form ASMT-12 is issued within 30 days. This closes the scrutiny proceedings for that financial year.
Escalation to Further Proceedings
If the explanation is not satisfactory, the officer may proceed under Section 65 (audit), Section 66 (special audit), Section 67 (inspection, search, seizure), or initiate recovery under Sections 73 or 74. This escalation must occur within 15 to 30 days of the taxpayer’s response.
Practical Handling of Scrutiny Notices
From a taxpayer’s perspective, handling scrutiny notices effectively is crucial to avoiding prolonged litigation and financial exposure.
Importance of Timely Response
Failure to respond to ASMT-10 notices often results in escalation to more stringent proceedings. Taxpayers must ensure that replies are filed in ASMT-11 within the prescribed timelines.
Documentation and Reconciliation
Taxpayers must maintain detailed reconciliations between GSTR-3B, GSTR-1, and GSTR-2A/2B. Supporting documents such as invoices, payment proofs, and supplier confirmations should be readily available to substantiate the explanation.
Use of Form DRC-03
Where discrepancies are genuine, taxpayers can make voluntary payments through Form DRC-03. Such payments are taken into account during scrutiny, and in many cases, proceedings are concluded without escalation.
Handling Retrospective Cancellations
When ITC denial arises due to retrospective cancellation of supplier registration, taxpayers should present evidence of genuine purchase, payment through banking channels, and movement of goods. Courts have been sympathetic in cases where taxpayers demonstrated bona fide conduct.
Ensuring Supplier Compliance
Taxpayers should implement robust vendor compliance checks. Ensuring that suppliers file their returns and pay taxes helps avoid ITC mismatches. Some businesses have started withholding payments to suppliers until GSTR-1 filing is confirmed.
Role of Technology in Scrutiny
Technology plays a vital role in both departmental detection and taxpayer compliance.
Data Analytics by Department
The department uses advanced analytics to match data across returns, e-way bills, and other filings. High-risk taxpayers are identified through patterns such as repeated mismatches or dealing with suspicious suppliers.
Use of Reconciliation Tools by Taxpayers
Businesses now rely on reconciliation tools that automatically match purchase registers with GSTR-2B and sales data with GSTR-1. These tools highlight mismatches in real time, allowing corrective action before scrutiny.
Portal-Based Communication
All scrutiny notices and responses are communicated electronically through the GST portal. This ensures transparency and creates an electronic trail of proceedings.
Balancing Departmental Powers and Taxpayer Rights
The scrutiny process under GST highlights the constant tension between ensuring compliance and safeguarding taxpayer rights.
Departmental Perspective
The department’s concern is to prevent revenue leakage due to fraudulent ITC claims, fake invoices, and under-reporting of outward supplies. Scrutiny, backed by data analytics, is a key tool for revenue protection.
Taxpayer Perspective
Genuine taxpayers often feel penalized for supplier defaults beyond their control. The rigid linking of ITC eligibility to supplier compliance has created significant hardship. Courts have acknowledged these hardships but upheld the statutory conditions.
Need for Balance
A balanced approach requires strict action against fraudulent taxpayers while providing relief to bona fide recipients. Clearer legislative provisions, coupled with robust supplier compliance enforcement, may help achieve this balance.
Conclusion
The scrutiny of returns mechanism under GST reflects the government’s intent to build a compliance-driven system where data verification and risk analytics ensure that only genuine credits and liabilities are reported. Section 61 of the CGST Act, read with Rule 99, provides the legal foundation, while Form ASMT-10, ASMT-11, and ASMT-12 operationalize the process of identifying discrepancies and giving taxpayers a fair opportunity to respond.
Judicial pronouncements have reinforced the principle that procedural safeguards must be respected and taxpayers cannot be ambushed with demands beyond what was communicated in scrutiny notices. At the same time, courts have underlined that negligence in replying to notices or reliance on non-compliant suppliers cannot protect recipients from the consequences of ineligible Input Tax Credit.
The evolving instructions and standard operating procedures issued by the department highlight the importance of structured scrutiny, use of technology, and quantified communication of discrepancies. These measures have brought uniformity and reduced arbitrariness in the exercise of powers by field officers. For taxpayers, however, scrutiny continues to be a sensitive process, particularly in relation to mismatches between GSTR-3B, GSTR-1, and GSTR-2B, or denial of credit due to supplier default or retrospective cancellations. The statutory framework, especially Section 16(2), continues to impose a high degree of responsibility on recipients to monitor vendor compliance, an obligation that is often seen as onerous but nevertheless binding.
From a practical standpoint, effective handling of scrutiny requires timely reconciliation of returns, maintenance of robust documentation, and proactive communication with suppliers. The availability of automated reconciliation tools and analytics solutions has eased the burden for many businesses, allowing them to pre-empt scrutiny notices. Where genuine discrepancies arise, voluntary payment through DRC-03 offers a pathway to closure without escalation into audit or adjudication. At the same time, failure to engage with the scrutiny process often results in litigation, with extended timelines under Section 73 or 74 exposing businesses to significant demands and penalties.
Overall, the journey of scrutiny of returns under GST has been a balancing act between enforcement and facilitation. While departmental measures are aimed at curbing tax evasion and protecting revenue, judicial interpretations and taxpayer practices continue to shape the boundaries of fairness and reasonableness. Going forward, greater stability in law, stricter enforcement against non-compliant suppliers, and an improved compliance ecosystem may reduce disputes over ITC mismatches and bring predictability to the scrutiny process. For taxpayers, diligence, transparency, and early reconciliation remain the most effective strategies to navigate scrutiny smoothly and avoid protracted disputes under the GST framework.