Form GST ASMT-10 scrutiny notice and how to reply in ASMT-11

What an ASMT-10 actually is

Form GST ASMT-10 is a "notice for intimating discrepancies in the return after scrutiny". The proper officer has looked at your GSTR-1, GSTR-3B, GSTR-2A or 2B, GSTR-9 and 9C, e-way bill data, and increasingly your income tax filings, and has found figures that do not agree. The form sets out each discrepancy, usually in an annexure, with the tax period, the amount and a one-line description of the alleged shortfall.

Two things follow from this. First, scrutiny under section 61 is a desk exercise, not an audit under section 65 and not an investigation under section 67. Nobody is coming to your premises at this stage. Second, an ASMT-10 carries no adjudicated liability. The amounts shown are the officer's arithmetic, not a determination. You are entitled to say the arithmetic is wrong, and in a large share of cases it is, because the comparison ignores timing, credit notes, zero-rated supplies or reverse charge.

The notice is served on the portal under Services, then User Services, then View Additional Notices and Orders. It is also emailed and sent by SMS to the registered contact. Officers are not required to serve a physical copy, so a stale email address on the registration is a real risk.

Where it comes from in law

Section 61(2) says that if the explanation is found acceptable, the officer shall inform you and no further action shall be taken. Section 61(3) says that where no satisfactory explanation is furnished within 30 days, or where you accept the discrepancy but fail to correct it in the return for the month in which it is accepted, the officer may initiate appropriate action. The 30-day period is extendable, but only if you ask before it expires, and the request should be in writing on the portal.

Note the practical trap in section 61(3). It contemplates correcting the discrepancy "in the return". For older years that route is now closed. Returns under sections 37, 39, 44 and 52 cannot be filed more than three years after the due date, and the portal began enforcing this from the November 2025 tax period. Since July 2025 the outward liability tables of GSTR-3B have been hard-locked to GSTR-1 and GSTR-1A, and the ITC side has been progressively locked to GSTR-2B. The only practical way to pay an accepted discrepancy is a voluntary payment in Form GST DRC-03.

What happens if you reply, and what happens if you don't

If you file ASMT-11 with a proper reconciliation and the officer is satisfied, an order in Form GST ASMT-12 is issued and the proceedings close for those periods and those grounds. This is a real closure and it is worth pursuing rather than paying under protest to make the file go away.

If you partly accept, you pay the accepted portion through DRC-03 with interest under section 50, quote the DRC-03 ARN in the ASMT-11, and contest the balance. If you accept nothing and the officer disagrees with you, the file moves to a pre-notice intimation in Form GST DRC-01A under Rule 142(1A), or straight to a show cause notice in Form GST DRC-01 under section 73, 74 or 74A. For financial years from 2024-25 onwards, section 74A replaces sections 73 and 74 and provides a single limitation period.

If you do not reply at all, expect the DRC-01 to be issued on the officer's own figures. The demand in the eventual order under Rule 142(5), summarised in Form GST DRC-07, then becomes a recoverable liability in your electronic liability register, and you are in appeal territory with a 10 per cent pre-deposit and a three-month limitation. Silence at the ASMT-10 stage is the single most expensive decision in this whole sequence.

The grounds that come up most often

GSTR-1 against GSTR-3B on the outward side

This is the largest category by volume. The comparison is crude: total tax in GSTR-1 against total tax in Table 3.1 of GSTR-3B for the same period. Legitimate reasons for a gap include invoices reported in the GSTR-1 of one month but taxed in the GSTR-3B of the next, credit notes reported in GSTR-1 that reduce liability, amendments filed in Tables 9A, 9B and 9C, supplies on which the recipient pays under reverse charge that appear in GSTR-1 Table 4B with no output tax in 3B, and exports or SEZ supplies made under a letter of undertaking. Answer with a month-wise reconciliation for the full financial year, showing that the annual totals tie. For periods from July 2025 onwards this class of mismatch has largely disappeared because Table 3 is auto-populated and locked, and corrections now run through GSTR-1A filed after GSTR-1 and before GSTR-3B.

ITC in GSTR-3B against GSTR-2B

The officer compares Table 4A of GSTR-3B with the auto-drafted statement. Common explanations are that the supplier filed GSTR-1 late so the invoice appeared in a later 2B, that the credit relates to IGST on imports or to a distribution from an input service distributor, or that it is credit on tax paid by you under reverse charge, which never appears in 2B at all. Since 1 January 2022 section 16(2)(aa) requires the invoice to have been communicated to you, so credit taken before the invoice appears is premature even if the supplier later files. Where that is what happened, show the invoice landing in the later 2B and show that it was not claimed twice. The revenue effect is usually only interest, and interest applies only if the credit was actually utilised.

Section 16(2)(c) where the supplier did not pay

Circular 183/15/2022-GST for FY 2017-18 and 2018-19 and Circular 193/05/2023-GST for 1 April 2019 to 31 December 2021 lay down a workable route. Where the difference for a supplier exceeds ₹5 lakh in a financial year, obtain a certificate from the supplier's chartered accountant or cost accountant with a UDIN confirming that tax was paid; below that threshold, a certificate from the supplier suffices. Where the supplier genuinely defaulted, the legal position is unsettled and you should be told so plainly. The Calcutta High Court in Suncraft Energy held the department should proceed against the supplier first, and the Gauhati and Karnataka High Courts have taken a similar line. The Patna High Court in Aastha Enterprises, the Kerala High Court in M. Trade Links and the Andhra Pradesh High Court in Thirumalakonda Plywoods have upheld denial on a literal reading. Courts have gone both ways and no Supreme Court ruling settles it.

Reverse charge on freight, legal fees, directors and commercial rent

Officers now read your profit and loss account and look for freight, legal and professional charges, director's remuneration, security services, sponsorship and rent, then check Table 3.1(d) of GSTR-3B. Renting of commercial immovable property by an unregistered landlord to a registered tenant has been under reverse charge since 10 October 2024 and generates a lot of notices. Reverse charge must be paid in cash and cannot be discharged from the credit ledger, so the exposure is a cash outflow plus interest rather than a permanent cost, provided the corresponding credit is otherwise eligible. Circular 211/5/2024-GST confirms that for supplies from unregistered persons the relevant financial year for the section 16(4) time limit is the year in which you issue the self-invoice.

Turnover against Form 26AS and the audited accounts

Receipts reflected in 26AS routinely include items that are not GST supplies: sale of capital assets, interest income, pure reimbursements, TDS deducted on advances, tax deducted in a later year on an invoice raised earlier, and amounts on which tax was collected under section 206C(1H) on goods. Prepare a bridge from book turnover to GST turnover to 26AS receipts and explain each line.

Rule 42 and Rule 43

Where you have exempt supplies, common credit must be reversed proportionately and recomputed annually. One point is worth knowing because officers get it wrong. The Explanation to Rule 42(1) excludes the value of services by way of extending deposits, loans or advances where the consideration is interest or discount, except for banks, financial institutions and NBFCs. So ordinary interest income on fixed deposits does not enter the exempt turnover of a trading or manufacturing MSME for Rule 42 purposes.

E-way bill value against declared turnover

E-way bills are generated for job work movements, branch transfers, sales returns, exhibition stock and deliveries under challan, none of which is a supply. Bills are also generated twice by consignor and transporter, and the consignment value is inclusive of tax while turnover is not. Extract the e-way bill data, tag the non-supply movements and show the reconciliation.

The money if the discrepancy sticks

Interest under section 50(1) runs at 18 per cent per annum. Rule 88B(1) gives real relief on belated returns: where the supply is declared in a return filed after the due date, interest is charged only on that part of the tax paid by debiting the electronic cash ledger, not on the gross liability. That relief does not apply once proceedings under section 73, 74 or 74A have commenced, which is another reason to settle matters at the scrutiny stage.

For input tax credit, section 50(3) read with Rule 88B(3) charges 24 per cent per annum, but only where the credit was both wrongly availed and utilised. The test is conjunctive. Credit that was availed and reversed without the credit ledger balance ever falling below the wrongly availed amount carries no interest at all. Officers frequently demand interest on availed-but-unutilised credit; produce the credit ledger balances for the intervening period and the demand should not survive.

Penalty is not automatic at the ASMT-10 stage. It arises only if the matter proceeds to a determination. If you pay tax and interest before a show cause notice is issued, section 73(5) means no penalty at all, and section 74(5) caps penalty at 15 per cent of the tax. For FY 2024-25 onwards, section 74A carries the same pre-notice reliefs.

Mistakes that cost money

Replying with a covering letter and nothing else is the most common error. An ASMT-11 that says "the difference is on account of timing" without a ledger, an invoice list and a period-wise table is treated as no reply. The second error is uploading the reply as a scanned image so the officer cannot check the totals. The third is paying the entire alleged amount through DRC-03 to close the matter quickly, without checking whether the ground is even sustainable, and then discovering that the same period is picked up again for another parameter. The fourth is missing the 30-day window and then asking for extension after expiry. The fifth is replying only on the portal and never following up with the jurisdictional office, which is where these files actually get closed.

What to attach

A period-wise reconciliation of GSTR-1 to GSTR-3B to the books, a reconciliation of GSTR-2B to the ITC register with invoice-level detail for the disputed credits, the audited or provisional financial statements with a turnover bridge, sample invoices, e-way bills and transport documents for the disputed movements, supplier certificates where section 16(2)(c) is alleged, the Rule 42 and 43 working, DRC-03 challans for anything accepted, and the electronic credit ledger extract if interest on wrongly availed credit is in issue.

Doing it yourself or getting help

If the notice raises one or two parameters, the amounts are modest, and your accounting data is clean, a competent in-house accountant can build the reconciliation and file ASMT-11 without outside help. Get professional support where the notice alleges section 16(2)(c) supplier default, where Rule 42 or 43 is involved, where the amounts run into several lakhs, where the same grounds cover multiple financial years, or where the period is close to the limitation date under section 73, 74 or 74A, because the officer will be under pressure to issue a notice rather than close the file.