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GST scrutiny checks the return, an audit verifies books and tax treatment, assessment determines the amount payable under a statutory route, and investigation-related action examines suspected contraventions using powers such as inspection, search or seizure. These labels are not interchangeable. A discrepancy in scrutiny can lead to an audit or determination proceedings, while an audit finding is not automatically a final demand. The notice, section and form you receive identify which process is actually underway.
GST processes at a glance
The Central Goods and Services Tax (CGST) framework uses several procedures that may look similar in a notice but serve different functions. This comparison shows the practical dividing lines.
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| Process | Main purpose | Typical focus | Who exercises it | Typical form or notice | Immediate outcome | Does it itself determine tax due? |
|---|---|---|---|---|---|---|
| Scrutiny of return | Check whether a filed return appears correct and seek an explanation for discrepancies | Return and related particulars | Proper officer | FORM GST ASMT-10 under the Rules | Scrutiny closes if the explanation is accepted; otherwise further action may follow | No. It is a verification and explanation stage |
| Tax-authority audit | Verify books, supporting documents, returns and tax treatment | Turnover, exemptions and deductions, tax rates, input tax credit, refunds and related records | Proper officer or audit team of the tax administration | FORM GST ADT-01 notice; findings in FORM GST ADT-02 | Findings and reasons are communicated; a short-payment or credit issue may lead to determination proceedings | No. The audit reports findings; a separate statutory determination may follow |
| Special audit | Obtain an independent professional audit when statutory conditions are met | Records and books of account identified in the direction | An officer of at least Assistant Commissioner rank, with prior Commissioner approval | FORM GST ADT-03 direction; findings in FORM GST ADT-04 | Professional report and communicated findings; you must have an opportunity to address material proposed for use against you | No. The report informs later action |
| Assessment | Determine tax liability through the route authorized by the Act | Depends on the route: available records, returns, estimated figures or a special-case record | Proper officer under the relevant assessment provision | Varies by assessment type | An assessment order or other statutory determination | Yes. Determining liability is its defining function |
| Investigation-related inquiry, inspection, search or seizure | Examine suspected contravention or evasion using a specific statutory power | Depends on the power invoked and the facts | Authorized officer under the relevant provision, including section 67 powers where applicable | Varies with the power used | Evidence gathering or inquiry; further proceedings may follow | Not necessarily. The investigative step and any later demand are distinct |
The same case can move through more than one row. For example, unresolved return discrepancies can result in an audit, inspection-related action or a tax determination. The label on the document you receive matters more than the informal word used by an officer or adviser.
What is GST scrutiny under section 61?
Scrutiny starts with a return already filed by a registered person. Section 61 allows the proper officer to examine the return and related particulars for correctness, notify discrepancies and seek an explanation. The statutory wording is:
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“The proper officer may scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto.”
How the scrutiny sequence works
- Return selection and review. The officer compares the return with related particulars available to the department. A query at this stage does not mean that evasion has been established.
- Discrepancy notice. The Rules identify FORM GST ASMT-10 for communicating the discrepancies and requesting an explanation. Read the notice for the tax period, issue described and response date.
- Your explanation and documents. Reconcile the figures to books, invoices, payment records, e-way bills, credit notes and other documents actually relevant to the discrepancy. Explain a difference rather than sending an unindexed data dump.
- Closure or escalation. If the explanation is accepted, the person is informed and no further action is taken in that scrutiny. If the explanation is not satisfactory or is not furnished, the officer may take further action authorized by the Act.
Do you have 15 days or 30 days to reply?
The Rules state that the response time specified in an ASMT-10 notice may not exceed 15 days. Separately, the section 61 text says that when no satisfactory explanation is furnished within 30 days of being informed of the discrepancy, or within a further period permitted by the officer, specified action may be taken. These passages should not be collapsed into one universal deadline. The date and period printed in your notice, the applicable rule and the current statutory text control your case. If they appear inconsistent, obtain professional advice before allowing the shorter date to pass.
What happens in a GST audit under section 65?
A tax-authority audit is broader than scrutiny because it tests the records behind the return and the way tax was applied. The officer can conduct it at the registered person’s place of business or at the tax office.
Notice and timing
- Prior notice: the Act provides at least 15 working days’ notice before a section 65 audit.
- Completion period: the audit is to be completed within three months from its commencement.
- Extension: the period may be extended by up to a further six months for reasons recorded in writing.
Those are statutory periods, not performance statistics or guaranteed dates for every file. Check the commencement date and any written extension in the documents served on you.
What the auditor verifies
The Rules describe a practical scope that can include:
- supporting documents for transactions and entries;
- books of account and GST returns;
- reported turnover and whether it is complete;
- exemptions and deductions claimed;
- the tax rate applied to supplies;
- eligibility and accuracy of input tax credit;
- refund claims and the documents supporting them; and
- other matters relevant to the correctness of tax liability.
Prepare a period-wise index so each ledger total can be traced to returns and source records. Keep originals secure and provide copies or controlled electronic access where appropriate.
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Forms and findings
FORM GST ADT-01 is the audit notice. During the audit, the auditor may communicate discrepancies and ask for a reply. After conclusion, findings, rights, obligations and the reasons for the findings are communicated in FORM GST ADT-02. An ADT-02 finding is not the same document as an assessment order. If the audit identifies short payment, non-payment or an input-tax-credit issue, the department may begin determination proceedings under the provisions applicable to the period; the cited CGST material refers to sections 73 or 74 for such follow-on action.
What is a GST special audit under section 66?
A special audit is a separate direction, not simply a more demanding version of a routine section 65 audit. An officer of at least Assistant Commissioner rank may direct one when the statutory conditions concern matters such as the complexity of the case, protection of revenue, doubts about declared value or the correctness of credit. Prior approval of the Commissioner is required.
Who conducts it and how long can it take?
The Commissioner-approved direction nominates a chartered accountant or cost accountant. The professional’s report is due within 90 days. The law allows a further extension of up to 90 days. The direction and any extension should identify the records and period involved.
Your hearing right
Before material from the special-audit report is used against you, you must be given an opportunity to be heard. Use that opportunity to identify factual errors, explain accounting treatment and point to records that were overlooked. FORM GST ADT-03 is used for the direction and FORM GST ADT-04 for communicating the findings.
What does a GST assessment mean?
Assessment is the legal determination of tax liability. It is an outcome-oriented function, unlike scrutiny or audit, which primarily verify information and report findings. There is no single assessment procedure that applies to every taxpayer.
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- Provisional assessment: used where the taxpayer cannot determine the value or applicable rate with certainty and seeks a provisional basis, subject to the conditions and finalization required by the relevant provision.
- Assessment of a filed return: return information may be examined through the statutory route applicable to the facts, including scrutiny that can lead to a determination.
- Assessment of a non-filer: a person who does not furnish a required return may be assessed using the records and information available to the officer.
- Assessment of an unregistered person: the Act provides a route for determining liability where a person who should have been registered was not.
- Summary assessment in special cases: an expedited route exists for protecting the interest of revenue in circumstances specified by the Act.
Because the legal basis, evidence and response rights vary by route, first identify the section and type named in the notice. Do not assume that a notice described casually as an “assessment” follows the same timetable or evidence standard as a scrutiny query.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How investigation-related action differs from an audit
Investigation-related action addresses suspected contravention or evasion and may use powers that are separate from audit. Section 67 concerns inspection, search and seizure under stated legal conditions. The fact that an officer asks for records, visits premises or records a statement does not, by itself, tell you which power has been invoked.
Read the authority before drawing conclusions
- Check the section quoted, the name and designation of the issuing officer, the tax period and the premises or records covered.
- Separate an evidence-gathering step from any later notice proposing tax, interest or penalty.
- Do not assume that every notice is an investigation, that every visit is a search, or that an audit finding proves fraud.
- Preserve files and avoid altering, deleting or backdating records. Seek qualified advice promptly if the communication involves search, seizure, a recorded statement or suspected evasion.
The exact procedural safeguards, response periods and consequences depend on the power used and the facts. They should be taken from the live notice and current law rather than inferred from the word “investigation.”
What should you do after receiving a GST notice?
Use this triage process before preparing a reply:
- Identify the document. Record its form number, section, date of issue, tax period, issuing authority and reply deadline.
- Classify the procedure. Is it ASMT-10 scrutiny, ADT-01 audit, ADT-03 special audit, an assessment order or an investigation-related authorization?
- List the requested material. Separate mandatory records from background documents so the response is complete without becoming unfocused.
- Reconcile the numbers. Tie the notice allegation to the relevant return table, ledger, invoice set, credit-note entry, payment and prior correspondence.
- Preserve evidence. Keep the notice, delivery proof, submitted reply, attachments and a copy of every record supplied. Use a clear file index and retain the original data.
- Meet the printed date or seek written time. Do not rely on an informal assurance that the deadline will be extended.
- Obtain qualified advice for a live dispute. A tax professional can assess privilege, hearing rights, voluntary correction and the appropriate response without assuming that one procedure is another.
How one process can lead to another
A return discrepancy may close after a satisfactory explanation. If it remains unresolved, the proper officer can move to further action authorized by the Act, which may include an audit, special audit, inspection or search powers, or a statutory determination. An audit can similarly produce findings that are communicated first and quantified later through the applicable determination route. This sequencing is why a query, an audit report and a demand should not be treated as synonyms.
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Checking the law and the date
The relevant materials are official Central Board of Indirect Taxes and Customs (CBIC) versions of the CGST Act and Rules. The consolidated Act material used for the section text is dated 31 August 2021, while the Rules material was recently available when checked. GST provisions, forms and administrative instructions can change. Before relying on a deadline, amendment-sensitive procedure or current-law conclusion in October 2026, verify the live consolidated statute, applicable notifications and circulars, and every detail in the notice served on you.
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