Under the GST law, scrutiny of returns (Section 61, CGST Act 2017) is a limited-scope review of a taxpayer’s filed returns. A GST officer conducting scrutiny may issue a notice in Form GST ASMT‑10 (per Rule 99 of the CGST Rules, 2017) to intimate discrepancies in the returns and seek the taxpayer’s explanation. A question arises whether, during such scrutiny, the officer can lawfully demand extensive records – for example, reconciliation statements, ITC ledgers, stock registers, vouchers, and financial statements – through the ASMT‑10 notice. This report analyzes the legal framework governing ASMT‑10, its intended scope and limitations, relevant judicial and administrative guidance, and the grounds and strategies for challenging an overly broad ASMT‑10 demand.
Section 61 and Rule 99: Scrutiny of Returns Process
Section 61 of the CGST Act empowers a proper officer to scrutinize a return (and the related particulars furnished by the taxpayer) to verify its correctness. If any discrepancy is identified from the return review, the officer must inform the taxpayer of such discrepancy “in the prescribed manner” and seek the taxpayer’s explanation Rule 99 of the CGST Rules operationalizes this by prescribing Form GST ASMT‑10 as the notice for intimating return discrepancies. Key aspects of the law include:
The scrutiny is to be conducted “with reference to the information available” with the officer. In practice, this means the officer uses the data already in the GST system or otherwise on record (e.g. the taxpayer’s GSTR-1, GSTR-3B, GSTR-2A/2B, GSTR-9/9C, e-way bill data, etc.) to spot inconsistencies or anomalies.
If a discrepancy is found, the officer “shall issue a notice in Form GST ASMT-10”, informing the taxpayer of the discrepancy and seeking an explanation within a specified time (normally 30 days). The notice should ideally quantify the tax or other amounts involved in the discrepancy, where possible.
The taxpayer may respond in Form GST ASMT‑11 with an explanation or by accepting the discrepancy and paying any shortfall. If the explanation is accepted, the officer must drop the matter and inform the taxpayer via Form GST ASMT‑12. No further action is taken in such case.
If the taxpayer fails to explain satisfactorily, or admits the discrepancy but doesn’t correct it, the law does not permit the officer to directly assess a tax liability under Section 61 itself. Instead, the officer may initiate appropriate further actions, such as an audit under Section 65, a special audit under Section 66, an inspection or investigation under Section 67, or issue a formal demand notice under Section 73/74 to adjudicate the tax discrepancy. In other words, scrutiny of returns is a preliminary diagnostic exercise; any recovery of tax or deeper examination of books must proceed under the specific provisions for audit or adjudication, not under Section 61.
This framework makes clear that Form ASMT‑10 is meant to pinpoint return discrepancies and obtain the taxpayer’s explanation, before escalating the matter to an audit or enforcement action if needed. It is not a tool for conducting a full audit or wide-ranging investigation by itself.
Scope of Form ASMT‑10: Limitations on Document Demands
By design, ASMT‑10 notices are intended to be focused and issue-specific. The language of Rule 99 indicates the notice should inform the taxpayer of “such discrepancy” – i.e. a concrete discrepancy detected in the return – and seek an explanation for it. The Central Board of Indirect Taxes and Customs (CBIC), in its Standard Operating Procedures (SOPs) for return scrutiny, has emphasized a narrow scope for ASMT‑10 notices:
No Roving Inquiries: During scrutiny, the officer is expected to rely on the information already available on record, and “there should normally not be any need for seeking documents/records from the taxpayer before issuance of Form GST ASMT-10.” In other words, the officer should identify discrepancies from the returns and related data without first demanding additional books or records. Scrutiny is meant to have a “minimal interface” with the taxpayer – it is not an occasion for an exhaustive document hunt.
Specificity of Discrepancies: CBIC instructions direct that discrepancies communicated via ASMT‑10 must be specific and not vague or general. The notice should ideally list each issue (e.g. a mismatch between GSTR-3B and GSTR-1 for a certain period, or an excess ITC claim as per GSTR-2B comparison) along with details and even worksheets or annexures if necessary to explain the variance. This requirement implies that an ASMT‑10 should not simply make an open-ended request for “all records” or unrelated information; it should clearly tie any information request to an identified discrepancy in the return. A broad demand for documents without identifying a particular discrepancy would fail the Rule 99 mandate of informing the taxpayer of the specific discrepancy being scrutinized.
Notably, the “related particulars” that an officer may scrutinize under Section 61 refer to the data furnished by the taxpayer along with the returns (for example, details in returns or annexed reconciliations like GSTR-9C). It does not ordinarily extend to every internal record of the business on a fishing expedition. In summary, the scope of scrutiny via ASMT‑10 is confined to verifying the accuracy of return declarations against other information in the officer’s possession, not to conduct a full-scale audit. As one commentary explains, “the scrutiny is concentrated only on the furnished data in the returns and pertinent documents instead of [on] a full-scale investigation.”
Therefore, an ASMT‑10 notice should normally request clarification or supporting evidence only in relation to the discrepancies identified (e.g. asking for an explanation of a turnover difference, with relevant invoices or reconciliations for that specific issue). It is outside the intended scope of Form ASMT‑10 to demand voluminous records like entire stock registers, purchase vouchers, or complete financial statements unless those are directly connected to a discrepancy evident in the returns. Demanding such detailed documents for a general review would effectively convert the scrutiny into an audit – bypassing the safeguards and procedures that apply to audits under Section 65.
Judicial and CBIC Guidance on Scrutiny Demands
The question of how far an officer can go under Section 61 has recently been addressed in judicial fora. A landmark precedent is the Jharkhand High Court’s decision in M/s Sri Ram Stone Works vs. State of Jharkhand (W.P.(T) No. 5535 of 2024, judgment dated 09-May-2025). In that case, multiple ASMT‑10 notices were issued to taxpayers alleging that their sales were below prevailing market price and asking why action under Section 73/74 should not follow for under-valuation. The High Court quashed those ASMT‑10 notices, holding that the scrutiny under Section 61 is limited to return-related discrepancies and cannot be used to conduct a valuation inquiry.
Key observations from the court include:
Section 61’s Objective: The court noted that Section 61 (and the corresponding Rule 99) is “with a clear objective to enable an Assessing Officer to point out discrepancies and errors occurring in the return filed by a registered person with that of the related particulars.” It is a mechanism to check the internal consistency and correctness of a taxpayer’s reported data.
Exceeding the Scope = Lack of Jurisdiction: If an officer, under the guise of scrutiny, goes beyond return discrepancies – for example, by “embarking upon an exercise of comparing the price of goods sold with a so-called market price” – that “is wholly without jurisdiction and beyond the scope of Section 61.” In Sri Ram Stone Works, comparing declared sale value with an external market benchmark was not a “discrepancy” evident from the returns; thus the use of Section 61 was improper. The Court emphasized that challenges like valuation of goods must be pursued, “if at all, under audit or adjudicatory provisions” of the Act, not via a scrutiny notice. All the impugned ASMT‑10 notices were accordingly quashed as ultra vires. The Court concluded that those notices “are wholly without jurisdiction and are accordingly liable to be quashed”, while granting liberty to the department to initiate proper proceedings under the correct provisions. This judgment reaffirms that scrutiny is a limited-scope assessment of return data, and any attempt to use it for wider investigative purposes (like probing pricing, profit margins, or demanding a general audit of books) will not withstand legal scrutiny.
Apart from case law, CBIC’s own instructions guide officers to stick to the mandate of Section 61/Rule 99. The Instruction No. 02/2022-GST (dated 22.03.2022) and Instruction No. 02/2023-GST (dated 26.05.2023) (SOPs for Scrutiny of Returns) reiterate that selection of cases for scrutiny will be based on risk parameters and data analytics, and that the proper officer’s role at scrutiny stage is to examine available information and issue ASMT‑10 for any discrepancies. Crucially, as noted earlier, the SOP explicitly states that “there should normally not be any need for seeking documents/records from the taxpayer before issuance of ASMT-10.” Even when ASMT‑10 is issued, the expectation is that the notice will specify the issues clearly and not make generalized demands. These guidelines reflect the legislative intent: ASMT‑10 is an intimation of discrepancies, not a blanket information-gathering notice.
In summary, both judicial precedent and administrative guidelines make it clear that a detailed documentary demand is not permissible under a Section 61 scrutiny unless it is directly relevant to identifiable return discrepancies. A scrutiny notice cannot serve as a substitute for an audit notice. If an officer requires extensive records to verify the correctness of returns, the law provides a mechanism – an audit under Section 65 – which comes with formal notice, time for preparation, and defined scope. Using ASMT‑10 to compel production of myriad documents would circumvent these protections and thus exceed the lawful scope of Section 61
Challenging Overbroad ASMT‑10 Demands – Legal Grounds
If a GST officer issues an ASMT‑10 notice that goes beyond the parameters discussed (for instance, asking for “all purchase invoices, sales registers, stock registers, cash ledger, bank statements and financial accounts for the year” without pinpointing any specific discrepancy in the returns), the taxpayer has strong legal grounds to challenge such a notice. The potential grounds include:
Ultra Vires Section 61/Rule 99: An overly broad ASMT‑10 is ultra vires (beyond the powers conferred by) Section 61 and Rule 99. The statute restricts scrutiny to verifying the return against “related particulars” furnished by the taxpayer, and Rule 99 confines the notice to informing the discrepancy foundtaxinformation.cbic.gov.in. If the notice does not clearly identify one or more concrete discrepancies arising from the returns, it fails to meet the basic statutory precondition for issuing ASMT‑10. A notice that simply demands a trove of documents in order to look for discrepancies in effect inverts the process and is not authorized by Section 61. Courts can declare such action void for want of jurisdiction, as seen in the Sri Ram Stone Works case (where notices under Section 61 were quashed for addressing issues beyond return discrepancies) In essence, Section 61 does not grant the officer a fishing license – any action outside its narrow ambit is invalid.
Contrary to Prescribed Procedure: Rule 99 and Form ASMT‑10 prescribe a specific procedure – the notice must inform the taxpayer of the discrepancy noticed and seek explanation. An ASMT‑10 that lacks a clear statement of discrepancies, or which makes only vague assertions (e.g. “please furnish documents to substantiate your returns”), violates the rule and the form’s legal purpose. CBIC’s guidance that discrepancies be “specific in nature and not vague or general” reinforces that a generic notice is procedurally improper. An assessee can argue that the officer did not follow the proper procedure, rendering the notice defective. Under Indian administrative law principles, if a statute or rule requires a certain procedure for taking action, non-compliance with that procedure can invalidate the action. Here, failure to specify the issues in ASMT‑10 (or demanding information unrelated to any stated issue) is a departure from Rule 99 and thus a ground for quashing the notice.
Circumvention of Audit/Investigation Provisions: The GST law deliberately provides separate provisions for detailed examination of a taxpayer’s books – notably Section 65 (Departmental Audit) and Section 67 (Inspection/Search). These provisions come with safeguards (e.g. prior notice for audit, approval requirements for inspections, defined time limits, etc.). If an officer uses a scrutiny notice to effectively conduct an audit (by demanding full books and records as would be done in an audit), the taxpayer can contend that this circumvents the law. In Sri Ram Stone Works, the High Court specifically noted that an attempt to conduct a valuation exercise under Section 61 was improper and must instead be done under audit or adjudication sections if at all Similarly, a demand for exhaustive records under ASMT‑10 can be characterized as an unauthorized audit. This can be challenged as an abuse of process or misuse of Section 61. Essentially, the taxpayer can argue: “If the department believes a thorough review of my accounts is needed, they should invoke Section 65 with due process, rather than issuing an ASMT‑10 beyond its scope.”
Violation of Natural Justice: Overbroad or unclear notices can also be attacked on natural justice grounds, particularly the facet of fair hearing. A taxpayer is entitled to know the specific allegation or discrepancy to effectively respond. If ASMT‑10 does not particularize what inconsistency has been found and instead asks for extensive information, it deprives the taxpayer of a fair opportunity to respond. It is fundamentally unfair to require a taxpayer to turn over mountains of documents without telling them what the officer is looking for or why those documents are necessary. Indian courts have held that vague show-cause notices or notices without clear charges violate natural justice, as the person cannot defend themselves properly. By analogy, an ASMT‑10 that simply demands documents “for scrutiny” fails to give the person adequate notice of the case against him. Moreover, if the notice is so broad that the taxpayer cannot possibly comply within the short 30-day window, that too can be argued as unreasonable and violative of natural justice (the timeframe presupposes a limited inquiry). The CBIC’s insistence on specificity can be cited as an administrative codification of this principle – it exists to ensure the taxpayer knows exactly what to explain, upholding fairness.
In practical terms, a taxpayer facing an egregiously broad ASMT‑10 may file a writ petition in the High Court seeking to quash the notice on the above grounds. The writ court can examine whether the notice conforms to the statutory limits. As demonstrated, courts are receptive to curbing departmental overreach in scrutiny proceedings. Even before resorting to courts, one can bring these points to the notice of higher GST authorities, arguing that the ASMT‑10 is legally untenable and should be withdrawn or revised.
Taxpayer’s Rebuttal and Response Strategies
When confronted with an ASMT‑10 that demands an unusual level of detail or appears to overstep the boundaries of a normal return scrutiny, a taxpayer should respond proactively and prudently. Here are strategies and steps to consider:
Timely Filing of Form ASMT‑11: It is important not to ignore the ASMT‑10 notice. Within 30 days, the taxpayer should file a reply in Form GST ASMT‑11 (or seek an extension if genuinely needed), to avoid being marked as non-compliant. Even if the notice is improper, responding preserves your rights and demonstrates cooperation. In the ASMT‑11, address any specific discrepancies that the officer has actually mentioned. For example, if the notice points out a mismatch between GSTR-1 and GSTR-3B for a certain month, provide the reconciliation or explanation for that issue, and attach supporting documents for that discrepancy alone (sales register extracts, etc.). By doing so, you show good faith in resolving bona fide discrepancies.
Object to Irrelevant Demands: For portions of the notice that stray beyond Section 61, politely but firmly object and seek clarification. One approach is to write a para in the ASMT‑11 response along these lines: “The Notice also calls for [list of broad documents]. We respectfully submit that such extensive information is beyond the scope of a scrutiny under Section 61, which is limited to discrepancies apparent from returns and related records. The Notice has not identified how these documents relate to any specific discrepancy in our returns. We therefore request clarification of the precise discrepancy that each category of requested document is meant to address. In the absence of a specific return-related discrepancy warranting these documents, we submit that this demand is not supported by Section 61 read with Rule 99.” This creates a record that you are not outright refusing to cooperate, but are challenging the legitimacy of the request. Backing your stance with references (for instance, quoting Rule 99’s requirement of informing discrepancies, or citing the CBIC SOP guidance that scrutiny should normally not require extraneous documents) can add weight.
Emphasize Willingness to Comply with Proper Procedures: You may add that “if the department deems a review of our books and records necessary beyond the return discrepancies, we are prepared to facilitate an audit under Section 65 given due notice. However, we understand that the present proceeding under Section 61 is not the appropriate forum for a full-fledged audit.” This signals that you are not trying to hide anything – you are simply insisting that the officer follow the correct legal route. It contrasts your readiness to comply under an audit with your legal objection to doing so under an ASMT‑10.
Use of Precedents and Circulars: Where appropriate, reference the principles from relevant High Court rulings or official circulars (in a respectful tone). For example, you might note: “We draw your kind attention to the recent judgment of the Hon’ble Jharkhand High Court in Sri Ram Stone Works vs State of Jharkhand (2025) which reiterated that the scrutiny of returns under Section 61 is confined to apparent discrepancies in returns, and that issues requiring valuation or detailed examination of records must be addressed under separate provisions (audit/adjudication). Our understanding is that the information sought in points X, Y, Z of the Notice would fall in the latter category, not stemming from any return discrepancy.” While a field officer may not formally concede to a court ruling from another jurisdiction, citing it builds a persuasive case and preserves the argument for future appeals or legal challenge. Likewise, mention the CBIC’s own instructions on being specific and not generally fishing for information.
Principles of Natural Justice: If the notice is glaringly vague (e.g. “discrepancies found in returns” with no further detail, accompanied by a long list of document demands), you should highlight that you are handicapped in replying meaningfully. “The Notice does not specify any particular discrepancy, which hampers our ability to offer a focused explanation. We are ready to explain and provide evidence on any pointed issue, but we cannot guess the department’s concern absent details. This lack of clarity prejudices our right to a fair opportunity of response.” Such language invokes the natural justice argument. It also sets the stage, if the matter escalates, to later claim that you were not given proper notice of allegations.
Partial Compliance (If Feasible): As a practical matter, if some of the asked documents are relatively easy to gather and might resolve the officer’s doubts, you may consider providing them with appropriate caveats. For example, if ASMT‑10 requests a reconciliation of GSTR-3B ITC with your purchase ledger, and you have that readily available, you could furnish it voluntarily. This can sometimes satisfy the officer and close the scrutiny. However, be cautious – providing all the documents exactly as asked, without protest, might be interpreted as acquiescence to the procedure. So strike a balance: comply with reasonable, relevant requests, but do not hand over everything unthinkingly. And for any submission, explicitly tie it to resolving the return discrepancy, not as a general audit compliance.
Escalation if Needed: If the officer persists with an illegitimate demand or issues an adverse finding for failure to submit extraneous documents, the taxpayer can escalate the matter. Options include approaching the Jurisdictional GST Superintendent/Assistant Commissioner or Joint Commissioner (the supervisory officers) through a letter, explaining that the ASMT‑10 is not in accordance with law or CBIC guidelines. Ultimately, if the issue is not resolved administratively, the taxpayer may have to file a writ petition in the High Court to quash or read down the ASMT‑10. As discussed, courts have quashed Section 61 notices that went beyond their remit. Legal counsel should be engaged in such cases to plead the violation of statutory limits and natural justice.
Throughout the response process, the tone should remain professional and factual. The taxpayer benefits from appearing as a compliant, law-abiding entity who is simply asking for the law to be followed correctly. Keep a meticulous record of all communications (upload all replies on the GST portal or send through proper channels). If the officer later initiates a demand under Section 73/74 without addressing your objections, those records will be crucial in your defense to show that due process was not followed.
Conclusion
In a nutshell, a GST officer cannot lawfully use Form ASMT‑10 (Section 61 scrutiny) as a carte blanche to demand every record and document of a taxpayer. The legal provisions and rules circumscribe scrutiny to discrepancies evident from return data. Form ASMT‑10’s function is to notify such discrepancies and seek clarification, not to conduct an audit by ambush. Demanding detailed ledgers, vouchers, and financials absent a clear return discrepancy nexus is beyond the scope of Section 61 and has been deemed ultra vires by courts. Taxpayers faced with overly broad ASMT‑10 notices have robust grounds to challenge them as illegitimate. The proper course for the department, if deeper verification is required, is to invoke the audit or investigation provisions with due safeguards.
A taxpayer should respond to an ASMT‑10 within the allowed time, addressing valid issues and politely resisting overreach. By invoking the law, rules, and principles of fairness, the taxpayer can make a strong case that an “overbroad” ASMT‑10 violates the GST Act’s scheme and the principles of natural justice. If necessary, such a notice can be contested in writ proceedings – and recent precedent suggests courts will uphold the taxpayer’s rights in such scenarios. In sum, Form ASMT‑10 is a tool for discrepancy resolution, not a dragnet for document fishing, and both legal authority and remedy exist to prevent its misuse.
