GST Notice & Audit Response

GST "notice and audit" compliance covers two distinct, sequential departmental processes: scrutiny of returns under Section 61 of the CGST Act, 2017 (read with Rule 99), and audit by tax authorities under Section 65 (Rule 101).

Scrutiny of Returns (Section 61, Rule 99): The proper officer may scrutinise a registered person's returns and related particulars to verify their correctness, without conducting a physical audit. Where a discrepancy is noticed — for example, an input tax credit mismatch against FORM GSTR-2B, a turnover variance against e-invoice or e-way bill data, or under-reported liability — the officer issues FORM GST ASMT-10, specifying the discrepancy and, where quantifiable, the tax, interest, and penalty implicated. The registered person must respond within thirty days (or such further period as the officer allows) in FORM GST ASMT-11, either explaining the discrepancy or paying the amount accepted as due. Section 61 by itself does not empower the officer to raise a tax demand: if the reply is accepted, the officer closes the matter in FORM GST ASMT-12; if no reply is furnished, or the reply is unsatisfactory, the officer may proceed to audit under Section 65, special audit under Section 66, inspection or search under Section 67, or demand proceedings under Section 73, 74, or (for tax periods from FY 2024-25) Section 74A.

Audit by Tax Authorities (Section 65, Rule 101): Where matters warrant a full audit, the Commissioner or an authorised officer may audit a registered person's books and records at the place of business or the tax office, on at least fifteen working days' prior notice in FORM GST ADT-01. The audit must ordinarily conclude within three months, extendable by the Commissioner for a further period not exceeding six months for reasons recorded in writing, with findings communicated in FORM GST ADT-02 within thirty days of conclusion — again feeding into Section 73, 74, or 74A demand proceedings where short payment or wrongly availed credit is detected.

Together, Sections 61 and 65 form the department's principal desk-review and on-site verification tools that precede any formal demand notice.

GST notice and audit response is the work of defending a business's position when the department asks questions — a notice under Section 73 or 74 of the CGST Act 2017, a scrutiny under Section 61, a special audit under Section 66, or a full audit under Section 65. Each is a formal process with a deadline, and each ends in a decision that can carry tax, interest and penalty. The response is where the business's records and its position meet the department's reading of them.

The notice is a conversation the business did not start but must finish. The department's case is built from the returns and the ledger data; the business's case is built from the records behind them — the invoices, the credit eligibility, the place-of-supply position, the classification. The response is not a letter; it is a written position supported by the records, filed within the time the Act allows.

The cost of a weak or missed response is the adjudicated demand: the tax with interest under Section 50 and the penalty under Section 74 for suppression or fraud, or the lower penalty regime of Section 73 where the position was honest. A demand once adjudicated is expensive to reverse, and the reversal runs through the appellate machinery.

This service is for businesses served with GST notices or selected for scrutiny or audit. We read the notice against the records, build the factual and legal position, prepare and file the response within the prescribed period, attend the proceedings, and where the department's case stands, take the matter to the appellate authority under the Act.