25. Scrutiny of Returns

(1) The prescribed authority shall, within the time and in the manner prescribed, scrutinize every return filed under sub-sections (1A) and (3) of section 24 for the purpose of ascertaining that —

(a) all calculations contained therein are arithmetically accurate;

(b) the output tax, the input tax, the tax payable and interest payable, if any, have been computed correctly and properly;

(c) the rates of tax have been applied correctly;

(d) evidence, as prescribed, has been furnished with regard to payment of tax and interest payable, if any; and

(e) the deductions claimed therein are substantiated in the manner and form prescribed under the Act or under any other law for the time being in force.

(2) If, upon scrutiny under sub-section (1), the prescribed authority discovers any error, he shall serve a notice in the prescribed form on the concerned dealer directing him to —

(a) pay, within thirty days, the extra amount of tax along with the interest, if any, payable and furnish the challan evidencing such payment; or

(b) explain, within thirty days, that the return or returns filed by him do not suffer from any error and all requirements specified in clauses (a) to (d) of sub-section (1) have been complied with.

(3) (a) The prescribed authority shall, in a case falling under clause (b) of sub-section (2) and after giving the dealer a reasonable opportunity to adduce necessary evidence, pass such order in the matter as it may deem fit.

(b) If, pursuant to an order under clause (a), any tax or interest is found to be payable by a dealer, a notice in the form and manner prescribed, shall be served upon the dealer requiring him to pay the tax and interest within the time as may be prescribed.

(c) Any tax or interest payable under clause (b) shall be deemed to be an arrear of tax within the meaning of section 39.