Scrutiny notices, departmental audits, special audits, DGGI investigations and best judgment assessments — AMLEGALS provides structured defence at every stage of the GST assessment pipeline, from the first ASMT-10 notice through to appellate litigation against adverse assessment orders.
The GST compliance verification architecture has matured significantly since 2017. Automated risk-scoring by GSTN, data analytics by DGGI and DGGST, and AI-driven mismatch detection across GSTR-1, GSTR-3B, GSTR-9, income tax returns and e-way bill data mean that scrutiny and audit selections are increasingly targeted. The response to these proceedings determines whether they resolve at the assessment stage or escalate into multi-year demand litigation.
The critical window is narrow: a well-crafted response to an ASMT-10 scrutiny notice can close the matter; a poorly handled Section 65 audit can generate Section 73/74 demand proceedings with interest and penalty. The distinction between a scrutiny observation and a demand notice is often decided by the quality of the initial response and the taxpayer\'s engagement strategy during audit.
AMLEGALS\'s assessment and audit practice operates on the principle of early containment: comprehensive response at the scrutiny stage, strategic audit management, and proactive compliance correction where genuine shortfalls exist — combined with vigorous defence against legally incorrect positions.
Drafting comprehensive responses to ASMT-10 notices: reconciliation of return data with books, explanation of discrepancies (GSTR-1 vs GSTR-3B, GSTR-3B vs GSTR-2A/2B, turnover vs income tax return), supporting documentation compilation, and strategic decision on voluntary payment vs contested reply.
Pre-audit preparation: document readiness, access coordination, officer engagement protocol. During audit: responding to information requests, managing site visits, clarifying queries in real time. Post-audit: response to ADT-02 findings, challenging incorrect observations, preventing escalation to Section 73/74/74A proceedings.
Representation during special audit proceedings: coordination with the nominated chartered accountant or cost accountant, providing structured information, responding to specific queries, and reviewing the draft report before submission. Challenge to the special audit order itself where the complexity threshold is not met.
Defence against best judgment assessments: Section 62 (filing the return within 60 days for automatic withdrawal), Section 63 (establishing that registration was not required or was obtained subsequently), Section 64 (challenging the urgency basis and summary procedure). Appeals against best judgment orders.
Management of provisional assessment cycle: initial application strategy, bond and security optimisation, finalisation representation, interest computation verification, refund claims on favourable finalisation, and appeal against unfavourable finalisation orders.
Response to anti-evasion investigations by DGGI (Directorate General of GST Intelligence): summons compliance under Section 70, statement recording safeguards, search and seizure rights (Section 67), and transition from investigation to formal demand proceedings. Includes coordination between central and state GST authorities.
Proactive audit readiness: reconciliation of GSTR-1/3B/9/9C, ITC ledger verification, e-way bill compliance audit, e-invoicing compliance check, classification review, and identification of voluntary disclosure opportunities to minimise audit exposure.
| Provision | Type | Key features |
|---|---|---|
| Section 60 | Provisional assessment | Where value or rate cannot be determined; bond with security required; finalisation within 6 months (extendable to 4 years) |
| Section 61 | Scrutiny of returns | Officer examines returns and seeks explanation via ASMT-10; taxpayer responds within 30 days; can escalate to Sections 65, 66, 73 or 74 |
| Section 62 | Assessment of non-filers | Best judgment assessment if return not filed after notice; automatically withdrawn if return filed within 60 days of assessment order |
| Section 63 | Assessment of unregistered persons | Best judgment assessment of person liable for registration but not registered; no automatic withdrawal mechanism |
| Section 64 | Summary assessment | In urgency cases with Additional/Joint Commissioner permission; taxpayer can apply for withdrawal within 30 days |
| Section 65 | Departmental audit | 15 days' notice; at place of business; completed within 3 months (extendable by 6 months); findings in ADT-02 |
| Section 66 | Special audit | By nominated CA/CMA; report within 90 days (extendable by 90 days); expenses borne by Commissioner |
Timelines and procedures are as per the CGST Act 2017 and CGST Rules 2017 (as amended). DGGI and anti-evasion investigations are conducted under separate authority and may involve central excise, service tax and GST matters simultaneously.
Section 61 of the CGST Act 2017 empowers the proper officer to scrutinise returns to verify their correctness. The officer issues Form ASMT-10 pointing out discrepancies and seeking explanation. The taxpayer must respond within 30 days (or extended period) explaining the discrepancy or paying the differential tax with interest. If the explanation is accepted, the matter is closed. If not accepted, the officer may initiate proceedings under Sections 65, 66, 73 or 74. Key strategy: respond comprehensively to ASMT-10 with documentary support to prevent escalation to demand proceedings.
Best judgment assessment applies in three situations: Section 62 (non-filing of return — if a taxpayer fails to file return even after notice, the officer assesses tax liability to the best of his judgment); Section 63 (assessment of unregistered persons — where a person fails to obtain registration despite being liable); and Section 64 (summary assessment — in cases where the officer has evidence that delay would adversely affect revenue, with permission of Additional/Joint Commissioner). Best judgment assessments under Section 62 are automatically withdrawn if the return is filed within 60 days (as extended by CBIC notification from the original 30 days).
Departmental audit under Section 65 is conducted by the Commissioner or officers authorised by him at the taxpayer's place of business. The officer must give at least 15 working days' prior notice in Form ADT-01. The audit must be completed within three months from the date of commencement, extendable by a further period of six months by the Commissioner for reasons to be recorded in writing. The taxpayer must provide access to books, documents and records. Audit findings are communicated in Form ADT-02 within 30 days of completion. If discrepancies are found, the proper officer may initiate action under Section 73 or 74.
Special audit under Section 66 is ordered by the Commissioner where the officer — during scrutiny, inquiry, investigation or any proceedings — finds that the complexity of the case requires specialised audit. The audit is conducted by a chartered accountant or cost accountant nominated by the Commissioner. The auditor must submit the report within 90 days (extendable by a further 90 days). The expenses of the audit are borne by the Commissioner. The taxpayer must provide all assistance and information. The audit report is considered by the proper officer before taking any action.
Yes, Section 60 of the CGST Act 2017 allows provisional assessment where the taxpayer is unable to determine the value of goods or services or the rate of tax applicable. The taxpayer files an application with the proper officer, who passes a provisional assessment order. A bond with security (not exceeding 25% of the amount covered by the bond) is required. The assessment must be finalised within six months (extendable up to four years in total). On finalisation, the differential tax is payable with interest from the date of provisional assessment, or refund is granted with interest at 6% per annum.
Strategic management of audit proceedings is critical: respond to ASMT-10 (scrutiny) and ADT-02 (audit findings) within time and with comprehensive documentation; identify and pay any genuine short-payment with interest before demand proceedings are initiated (self-ascertained tax payment extinguishes the demand basis); challenge audit observations that are legally incorrect through detailed written submissions citing circulars, advance rulings and precedents; and maintain contemporaneous documentation (agreements, correspondence, ledger reconciliations) that supports the position taken in returns.
No. No engagement is treated as accepted until conflicts, scope and terms are confirmed in writing.
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