By CA Gaurav Gandhi - September 7, 2018
GST is a self-assessment tax wherein the assessee themselves assess their tax liability without any intervention from the department. Thus, to safeguard the interest of the tax department and avoid any misappropriations by the assessee, Government has established GST audit mechanism to ensure the provision of the law are complied with.
Following are the three cases where GST audit is required:
1. Audit by a CA : When turnover exceeds Rs. 2 crores
Similar to Income Tax (Refer blog dated 05 September 2018), provision for audit by a Chartered have been included in GST under Section 35 of CGST Act read with Rule 80 of CGST Rules, 2017.
Every assesse whose turnover exceeds Rs. 2 crores during the financial year is required to get his accounts audited by a Chartered Accounts / Cost Accountant and will be required to furnish the following along with the Annual Return under Form GSTR-10
• Furnish a copy of the audited annual accounts and
• a certified reconciliation statement in Form GSTR 9C.
2. Normal audit by the commissioner –
Like every other statute, GST law also contains a provision of audit under Section 65 of CGST Act, to be conducted by GST authorities to ensure the appropriateness of the returns and compliances being made by registered persons. CGST/ SGST commissioner or any other officer authorisedby him can undertake audit of any registered person at such frequency and in such manner as prescribed.
Process of audit by Commissioner:
(A) Place of audit: Audit can be conducted either at the premises of the person or else proper officer can call for necessary information and documents at his office.
(B) Manner of giving notice of scrutiny/ assessment: A clear 15 days notice is to be provided to the registered person before the initiation of the audit in GST ADT 01.
(C) Time limit of conclusion: The audit proceedings are required to be closed within 3 months from the date of commencement of audit. For this matter, date of commencement of audit shall be taken as date on which the necessary documents and information are received by the proper officer or audit is initiated at the business premises, whichever is later.
(D) Extension of time limit: The period of 3 months can be further extended by a period of maximum 6 months if the commissioner is satisfied that the audit cannot be completed within prescribed period and documenting the reasons for the same in writing.
(E) Duties of registered person: During the course of audit, the registered person is required to provide the Commissioner/ Officer with all necessary facilities to verify the books of accounts or other documents, provide cooperation/ assistance and furnish information required and render assistance for timely completion of the audit.
(F) Report of audit: On conclusion of audit, Commissioner/Officer will inform the registered person within 30 days about the findings along with his rights and obligations and basis for such findings in Form GST ADT 02 .
On furnishing the report, Commissioner/ Officer shall determine the tax liability and interest and penalties to be recovered from registered person and begin to collect the same.
3. Special audit in GST –
GST authorities can direct any taxpayer during scrutiny, inquiry, investigation or any other proceedings to get their books of accounts audited by a professional (Chartered Accountant or a Cost Accountant) based on the complexity of each case.
It is a legal way for the GST officers to seek professional expertise for the determination of tax liability in complex cases.
Process of Carrying out Special Audit: To carry out special audit, the Assistant Commissioner or any other senior officer with prior approval of Commissioner can direct a registered person in Form GST ADT 03 to get his books of accounts audited by a CA if he’s of the opinion that
(i) the value of goods/ services has not been correctly declared; or
(ii) Credit declared in the returns is not within normal limits.
The Commissioner would nominate a Professional and determine the expenses of examination and audit of records alongwithhis remuneration.
Time Limit and Report of Special Audit:
Nominated professional shall submit his signed audit report within 90 days in Form GST ADT 04 to Assistant Commissioner.
Extension of Time Limit: On an application made by the professional or the registered person the period of 90 days can be extended by a period of further 90 days by the Assistant commissioner.
(i) The provisions of Special audit shall apply regardless of the fact that the books pf accounts of the assessee have already been audited under this act or any other act.
(ii) The assessee must be given reasonable opportunity of being heard in respect of any material findings to be used in any proceedings against him found during the special audit.
(iii) In case there is determination of any unpaid tax amount, erroneous refunds or input credits wrongly availed or utilised, the demand and recovery proceedings shall be initiated against the assessee.
Form numbers along with their purposes
GST ADT 01
Notice of normal audit by the commissioner to the registered person
GST ADT 02
Normal Audit findings to be submitted to the registered person by the commissioner.
GST ADT 03
Assistant commissioner to direct special audit to an assesse
GST ADT 04
Special audit report to be submitted by the professional to assistant commissioner and assessee
Audited books of accounts to be submitted by assesse in case of turnover exceeding Rs. 2crore
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