Received a GST scrutiny notice (ASMT-10)? What it means and how to reply

A notice from the GST department is stressful, especially when it arrives with a figure attached. But a scrutiny notice in Form GST ASMT-10 is not a penalty order. It is the officer telling you that something in your returns does not add up and asking you to explain. Handled properly and on time, many scrutiny notices end with nothing more than a clarification or a small correction.

This guide explains what ASMT-10 is, the usual reasons for receiving one, and how to reply.

What an ASMT-10 notice is

Under section 61 of the CGST Act, a proper officer can scrutinise the returns you have filed to check that they are correct. If the officer finds discrepancies, they issue Form ASMT-10, which:

• lists the discrepancies they found, period by period;
• may show the tax, interest and penalty they believe is due as a result; and
• asks you to explain within a stated time, usually 30 days from the date of the notice.

The notice will appear on the GST portal under your notices and orders, and is usually also sent by email. Note the reference number and date; everything else follows from those.

Common reasons for a scrutiny notice

Most scrutiny notices come from mismatches the department's systems can see automatically. The most common are:

• Sales in GSTR-1 do not match sales in GSTR-3B. For example, an invoice was reported in GSTR-1 but the tax on it was not paid in GSTR-3B for the same period.
• Input tax credit claimed in GSTR-3B is more than the credit shown in GSTR-2B. This often happens when a supplier filed their GSTR-1 late or not at all, or when credit was claimed for the wrong period.
• Turnover in GST returns does not match turnover elsewhere, such as the e-way bills you generated or the figures in your income tax return.
• Credit claimed that is blocked or ineligible, for example on items that section 17(5) does not allow, or credit that should have been reversed.
• Tax paid under the wrong head, such as IGST instead of CGST and SGST.

How to reply, step by step

1. Read the notice carefully and diary the date

Check the GSTIN, the period and each discrepancy listed. Work out the reply deadline. If you need more time, you can ask for an extension, but do not assume one will be granted, and never let the date pass without a reply.

2. Rebuild the figures for the period

Before writing anything, pull together the documents behind each discrepancy: your sales register, purchase register, GSTR-1, GSTR-3B and GSTR-2B for each period, e-way bills, and any credit notes or amendments. Work out, line by line, whether the officer is right.

You will usually find one of three things for each point:

• The difference is explained. For example, sales were reported in GSTR-1 in one month and the tax paid in GSTR-3B in the next, or a supplier's invoice appeared in GSTR-2B in a later month. Here you need to show the reconciliation.
• The difference is a genuine error. Tax was underpaid or credit over-claimed.
• Part of each. This is common.

3. Pay what is genuinely due before replying

If you agree that some tax is payable, pay it, along with interest, before you reply. This is usually done through Form DRC-03, though in some cases it can be corrected through a later return. Keep the payment reference; you will quote it in your reply. Paying what is clearly owed shows good faith and often settles that point entirely.

4. Draft a clear, point-by-point reply

The reply is filed in Form GST ASMT-11. Answer each discrepancy in the same order as the notice. For each one, say whether you accept it, accept it in part, or disagree, and why. Attach the evidence: reconciliation sheets, copies of invoices, GSTR-2B extracts, or the DRC-03 payment reference.

A good reply is factual and short. It explains the numbers; it does not argue with the officer. Where the difference is a timing issue, a simple table showing the month the invoice was reported and the month the tax was paid is often the clearest evidence.

5. File it on the portal and keep the acknowledgement

On the GST portal, open the notice under your case, go to the replies section, enter your reply, attach your documents and file it with your digital signature or EVC. Download and keep the acknowledgement. The case status should show that a reply has been submitted.

What happens next

If the officer accepts your explanation, the proceedings are dropped by an order in Form ASMT-12. That is the outcome you are aiming for.

If the officer does not accept the reply, or if no reply is filed in time, the matter can move on. The officer may start an audit or inspection, or issue a show cause notice for demand and recovery under section 73 or 74, which is a more serious and more formal process. This is why the first reply matters: it is your best chance to settle the matter early.

Mistakes to avoid

• Ignoring the notice. Silence is treated as having no explanation.
• Replying without reconciling. A vague reply invites further questions.
• Arguing every point. If an amount is genuinely due, pay it and say so. Spend your effort on the points where you are right.
• Losing track of the deadline when the notice arrives during a busy filing week.

How to make notices less likely

Most scrutiny notices start as a mismatch that could have been spotted earlier. Reconcile GSTR-1 against GSTR-3B every month, check purchases against GSTR-2B before claiming credit, and follow up with suppliers whose invoices are missing. Keep purchase bills and credit notes organised by month so that, if a question does come, the evidence is already in one place.

For CA firms handling many clients, the challenge is tracking each notice through to its reply. In SquareBooks, every notice is logged against the client with its reply date, assignee and timeline, and the firm can ask the client for supporting documents from the notice itself.

Key takeaways

• ASMT-10 is a scrutiny notice asking you to explain discrepancies; it is not a final demand.
• Reply in ASMT-11 within the time given, usually 30 days.
• Reconcile first, pay anything genuinely due (usually through DRC-03), then reply point by point with evidence.
• If accepted, proceedings close with ASMT-12. If not, the matter can escalate to an audit or a show cause notice.

This guide is general information, not legal or tax advice. Every notice depends on its facts. Speak to your chartered accountant or tax adviser before replying.