CA Final · Indirect Tax Laws

Assessment and Audit: formula sheet

Full chapter guide

Key formulas

Purpose of scrutiny (Section 61): Proper officer scrutinises return and related particulars → verifies correctness → informs discrepancies → seeks explanation; It applies to returns furnished by registered persons. It is a desk review, not an audit.
Notice of discrepancy (Rule 99): Discrepancy noticed → notice in FORM GST ASMT-10 → explanation sought; ASMT-10 is issued by the proper officer. It is not a show cause notice.
Reply by registered person (Rule 99(2)): Accept + pay tax, interest and other amount, or furnish explanation → FORM GST ASMT-11; Under Rule 99(2), reply within 30 days of being informed, or such further period as the proper officer permits.
Acceptance of explanation (Rule 99(3)): Explanation acceptable → proper officer informs in FORM GST ASMT-12 → no further action; ASMT-12 is an intimation of acceptance. The officer informs the registered person that no further action will be taken in the matter.
Consequence of non-reply or non-correction: No satisfactory explanation in time, or discrepancy accepted but not corrected in return → action under section 65 / 66 / 67 or determination of tax under the demand provisions; Corrective measure means correcting the return for the month in which the discrepancy is accepted.
Section 62 trigger: Registered person + no return under s.39 or s.45 + notice under s.46 served + still no return → best judgment assessment; The s.46 notice is a precondition. Without it, section 62 cannot start.
Section 62 withdrawal: Valid return filed within 30 days of service of the order → order deemed withdrawn; Interest under s.50(1) and late fee under s.47 continue. Withdrawal does not waive them.
Section 63 rule: Person liable to register but unregistered (or registration cancelled but liable to pay tax) + reasonable opportunity of being heard → best judgment assessment for the relevant tax periods; The proviso requires a hearing before the order. Do not write that prior permission of the Additional or Joint Commissioner is needed here. That is a section 64 condition.
Section 64 conditions: Evidence of tax liability + reason to believe delay hurts revenue + prior permission of Additional/Joint Commissioner → summary assessment; All three conditions are needed. It applies to any taxable person, including an unregistered one. Mere suspicion of non-payment is not enough.
Section 64 remedy: Application within 30 days (or officer's own motion if order is erroneous) → order withdrawn → procedure under s.73 or s.74; The withdrawing authority is the Additional or Joint Commissioner.
Standard of assessment: Best judgment = based on all relevant material available or gathered, not guesswork; Use this phrase in your answers for sections 62 and 63.
Who can direct: Officer ≥ Assistant Commissioner + prior approval of Commissioner; A Superintendent or Inspector cannot order special audit. The direction is in writing, in FORM GST ADT-03 under Rule 102.
Grounds: Nature and complexity of case + interest of revenue + (value not correctly declared OR credit not within normal limits); The officer must be in the middle of scrutiny, inquiry, investigation or another proceeding. The grounds are alternative, not cumulative.
Who audits: Chartered accountant or cost accountant nominated by the Commissioner; The taxpayer cannot choose the auditor. The Commissioner nominates.
Time limit: 90 days + possible extension of 90 days = maximum 180 days; The Assistant Commissioner may extend, in his discretion, on application by the registered person or the auditor, or for material and sufficient reason. Extension is not automatic.
Fees and expenses: Determined and paid by the Commissioner; The registered person does not bear the cost, including the auditor's remuneration.
Safeguard: Opportunity of being heard before using material from special audit; Natural justice applies. The section works irrespective of any earlier audit under section 35(5) or other law.
Authority for inspection: Proper officer not below Joint Commissioner + reason to believe → written authorisation to another officer to inspect; The grounds are: suppression of supplies or stock, excess ITC claimed, contravention to evade tax, or goods that have escaped tax or records kept in a secret place by a transporter or warehouse owner. The authorisation is in the prescribed form (INS-01).
Places that can be inspected: Place of business of a taxable person | of a person transporting goods | of the owner or operator of a warehouse or godown; Inspection is not limited to the taxpayer's own premises.
Authority for search and seizure: Joint Commissioner or above + reason to believe goods liable to confiscation or relevant documents are secreted → written authorisation to search and seize; The trigger is that things are secreted. A routine verification does not qualify.
Goods that cannot be physically seized: Seizure not practicable → order that owner or custodian shall not remove, part with or deal with the goods without permission; Prescribed order form is INS-03. This is a 'prohibitory order' used instead of seizure.
Retention of seized documents: Retain only as long as necessary for examination and for any inquiry or proceedings; the person may take copies; Documents are not held for a fixed number of days. The test is necessity for examination and proceedings. The person from whose custody they were seized can make copies. Do not apply the six-month notice rule for goods to documents.
Time limit for seized goods: No notice within 6 months of seizure → goods returned; extension up to a further 6 months for sufficient cause; The extension is by the proper officer for sufficient cause, and the reason must be recorded.
Release of seized goods: Provisional release on bond and security, or on payment of applicable tax, interest and penalty; Perishable or hazardous goods, or goods whose value falls quickly, can be disposed of by the officer in the prescribed manner.
Arrest: Commissioner has reason to believe a specified offence has been committed with tax evaded, ITC wrongly availed or refund wrongly taken above ₹2 crore → authorises an officer to arrest; The ₹5 crore line decides the type of offence, not whether arrest is possible. Above ₹5 crore the offence is cognizable and non-bailable: arrest follows criminal procedure law and the person must be produced before a Magistrate within 24 hours. Above ₹2 crore up to ₹5 crore the offence is non-cognizable and bailable, and under Section 69(2) a Deputy or Assistant Commissioner releases the arrested person on bail. Up to ₹2 crore, the Section 69 arrest power does not apply.

Quick revision

Under GST, the registered person assesses their own tax and files returns on that basis.
Provisional assessment is allowed when the person cannot determine the value or rate, and it needs a request and the officer's order.
Provisional assessment is later finalised, and the difference is settled through payment or refund with interest as applicable.
Scrutiny of returns is a desk review by the proper officer, who points out discrepancies and asks for an explanation.
If the explanation is accepted, the matter ends. If not, the officer can start other action such as audit or demand.
Under Section 62 CGST, best judgment assessment applies where a registered person fails to furnish the return under Section 39 or 45 even after a notice under Section 46. The officer assesses on the basis of all relevant material available or gathered. The assessment order is deemed withdrawn if the person furnishes a valid return within 30 days of service of the assessment order. Even after the order is deemed withdrawn, the liability for interest under Section 50(1) and for late fee under Section 47 continues to apply.
Under Section 63 CGST, the proper officer may assess a taxable person who is liable to be registered but has not obtained registration. The assessment is to the best of the officer's judgment for the relevant tax periods. No order can be passed without giving the person a reasonable opportunity of being heard. Do not describe it as requiring a show cause notice.
Audit by tax authorities checks records, returns and compliance, and the person must be given prior notice.
Under Section 66 CGST, if at any stage of scrutiny, inquiry, investigation or other proceedings an officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within normal limits, he may direct the registered person to get the records, including books of account, audited by a chartered accountant or cost accountant. The direction needs the Commissioner's prior approval and is given in writing. The chartered accountant or cost accountant is nominated by the Commissioner, not chosen by the officer or the person. The audit report must be submitted within 90 days, extendable by a further 90 days.
Inspection, search and seizure need authorisation by an officer of the required rank, based on reason to believe.
Arrest is allowed only for specified offences and only on the officer's reason to believe, with the safeguards provided in the law.
Always check the current time limits and thresholds in the official text before the exam.

Common mistakes

Treating ASMT-10 as a show cause notice and saying penalty can be imposed through it. Fix: Write that ASMT-10 only seeks an explanation. Demand and penalty come later, only through the demand provisions.
Mixing up ASMT-10, ASMT-11 and ASMT-12. Fix: Remember who signs each one: ASMT-10 by the officer (notice), ASMT-11 by you (reply), ASMT-12 by the officer (acceptance).
Applying section 62 without a section 46 notice. Fix: Always write 'even after service of notice under section 46' in your answer. If the facts show no notice, section 62 is not yet available.
Saying the section 62 order is cancelled and nothing more is payable once a return is filed. Fix: Add that interest under section 50(1) and late fee under section 47 continue to be payable.
Saying the registered person appoints the auditor and pays the fees. Fix: Remember that in special audit the Commissioner nominates the auditor and determines and pays the expenses and remuneration.
Allowing a Superintendent or any proper officer to order it. Fix: Write that the officer must be not below the rank of Assistant Commissioner, and that the Commissioner's prior approval is needed.
Saying inspection and search are the same power. Fix: Inspection is verification of a known place of business, godown or warehouse. Search is for secreted goods or documents and can lead to seizure. Both need written authorisation, but they rest on different grounds.
Assuming any GST officer can start a search on his own. Fix: The authorising officer must be a Joint Commissioner or above. That officer authorises another officer in writing. The inspecting officer needs that authorisation.

Exam tips

Learn the form chain ASMT-10, ASMT-11 and ASMT-12 cold. Examiners often ask which form is used at which stage.
In case scenarios, always compute tax and interest and show the working, because the numbers carry marks.
State that scrutiny is a desk review of furnished returns and does not involve inspection of premises.
End each answer with the consequence: closure by ASMT-12 on acceptance, or follow-up action if the reply is missing or unsatisfactory.
Write the reply period as: within 30 days of being informed, or such further period as the proper officer permits.
Practise a one-line comparison of sections 62, 63 and 64 on person, trigger, pre-condition and remedy. Many questions are built on this contrast.
In scenario MCQs, look for the missing safeguard: no section 46 notice (section 62), no reasonable opportunity of being heard (section 63) or no prior permission of the Additional or Joint Commissioner (section 64). That is usually the examiner's trap.
Always mention that interest and late fee survive a deemed withdrawal under section 62.