GST Notice on Exempt-Turnover Mismatch, Closed Without Deman

This note walks through a common GST scrutiny trigger: a figure that appears in one return but not in another. Identifying details of the taxpayer have been removed.

The situation

A registered business filed its monthly GSTR-1 and GSTR-3B returns for a financial year in the ordinary course. At year end, its GSTR-9C (reconciliation statement) showed exempt turnover of about ₹1.09 crore in Table 7B.

The problem

The department's automated scrutiny compared that figure against the same year's GSTR-1 (Table 8) and GSTR-3B (Table 3.1), where the exempt turnover showed as nil. That mismatch generated a show cause notice in Form ASMT-10, asking the taxpayer to explain the difference and produce supporting documents for the exemption claimed.

What the taxpayer did

Requested and attended a personal hearing rather than replying in writing alone.
Filed a written reply within the time given, with supporting documents explaining why the turnover in question was genuinely exempt, and why it had been captured correctly in the annual return but not separately broken out in the monthly returns.

The outcome

The officer's order records that, on verifying the explanation and documents, the exempt and non-GST supplies reported were found to be in compliance with the Act, and genuine. The proceedings were dropped, with no tax, interest or penalty. A related Section 61 scrutiny notice on the same GSTIN, raised separately, was also closed as satisfactory with no further action.

Why this matters

An ASMT-10 notice is a request for an explanation, not a finding against the taxpayer. Outcomes generally turn on three things:

Responding within the time given. A missed deadline can turn a routine query into an assessed demand by default.
Reconciling the actual numbers before replying, so the explanation matches what the returns show, rather than restating the same mismatch.
Attending the personal hearing where one is offered. It gives the officer a chance to ask questions the written reply alone might not cover.

What business owners should check every year

Table 8 of GSTR-1, Table 3.1 of GSTR-3B and Table 5 and 7 of GSTR-9/9C should agree on exempt, nil-rated and non-GST turnover. See our monthly GST reconciliation checklist for a routine that catches this before a notice does.

This note describes a single matter and its outcome. It is general information, not a prediction of how any other notice will be decided. If you have received an ASMT-10 or a Section 61 notice, see our GST services or notice response checklist.

Need help with this? See our Tax Notice & Litigation Support or book a consultation. This article is general information, not advice for your specific situation.

Benfer Antony A B, Finance & Tax Consultant and founder of Growth Circle. This article is general information. Tax rules change, so confirm your position before you act.

GST Notice on Exempt-Turnover Mismatch, Closed Without Demand