GST Audit Provisions Turnover based Audit/ Normal Audit/ Special Audit
GST Audit define in Sub-section 13 of Section 2 “audit” means the examination of records, returns and other documents maintained or furnished by the GST registered person under this Act (CGST/SGST) or the (CGST/SGST) rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and (ITC) Input tax credit availed, and to assess his compliance with the provisions of CGST/SGST Act or the(CGST/SGST) rules made thereunder;
Types of GST Audit
|Types||Performed By||When Initiated|
|Turnover based Audit||Chartered Accountant or Cost Accountant appointed by the taxpayer||Every GST registered person If the Turnover exceeds 2 crores the taxpayer has to get his accounts & records audited|
|Normal audit/General Audit||Commissioner of CGST/SGST or any Officer authorized by him||On order of GST Commissioner by giving 15 days prior notice|
|Special audit||A Chartered Accountant or Cost Accountant, nominated by Commissioner||On order of GST Deputy/Assistant Commissioner with prior approval of Commissioner|
According Sub-section 23 of Section 2 “chartered accountant” means a chartered accountant as defined in clause (b) of sub-sec.(1) of section 2 of the Chartered Accountants Act- 1949;
According Sub section (35) of Section 2 “cost accountant” means a cost accountant as defined in clause (c) of sub-section (1) of section 2 of the Cost and Works Accountants Act- 1959;
Audit by a Chartered Accountant or a Cost Accountant –
Section 35(5) of the CGST Act/ SGST Act-2017 read with Rule 80(3) of the CGST/SGST Rules, 2017
Section 35 (5) of CGST Act define that Every GST registered person whose turnover during a F.Y (financial year) exceeds the prescribed (2 Crore) limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual Boos of accounts, the reconciliation statement (in FORM GSTR-9C) under sub-section (2) of section 44 of this act and such other documents in such form and manner as may be prescribed
Rule 80(3) of the CGST/SGST Rules, 2017- Every registered person whose aggregate turnover during a financial year exceeds 2 crore rupees shall get his accounts audited as specified under sub-sec. (5) of section 35 and he shall furnish a copy of audited annual books of accounts and a reconciliation statement, duly certified, in GST FORM GSTR-9C, electronically through the GST common portal either directly or through a Facilitation Centre notified by the GST Commissioner.
Normal audit/General Audit
Audit by tax authorities.– Section 65 of the CGST/SGST Act read with Rule 101 of the CGST/SGST Rules, 2017
Section 65 of CGST Act provide that the Audit by GST authorities.
- The GST Commissioner or any officer authorized by him, by way of a general or a specific order, may undertake GST audit of any GST registered person for such period, at such frequency and in such manner as may be prescribed.
- The officers referred to in sub-section (1) may conduct audit at the place of business of the GST registered person or in their office.
- The GST registered person shall be informed by way of a notice not less than 15 working daysprior to the conduct of GST audit in such manner as may be prescribed.
- The audit under sub-section (1) shall be completed within a period of 3 monthsfrom the date of commencement of the audit:
Provided that where the GST Commissioner is satisfied that audit in respect of such GST registered person cannot be completed within 3 (three) months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding 6 (six) months.
For the purposes of this sub-section, the expression “commencement of GST audit” shall mean the date on which the (Books of Accounts) records and other documents, called for by the GST authorities, are made available by the GST registered person or the actual institution of GST audit at the place of business, whichever is later.
- During the course of audit, the GST authorized officer may require the GST registered person,—
(i) to afford him the necessary facility to verify the books of account or other documents as he may require in Audit;
(ii) to furnish such information as he may require and render assistance for timely completion of the GST audit.
- On conclusion of GST audit, the proper gst officer shall, within 30 (thirty) days, inform the registered person, whose records (books of Accounts and other document) are audited, about the findings, his rights and obligations and the reasons for such findings.
- Where the GST audit conducted under sub-section (1) of this section results in detection of GST not paid or short paid or erroneously refunded, or (ITC) Input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74 of this act.
Rule 101 of the CGST/SGST Rules, 2017
- The period of audit to be conducted under sub-section (1) of section 65 of this act shall be a financial year [or part thereof] Inserted vide Notification no. 74/2018-CT dated. 31.12.2018 or multiples thereof.
- Where it is decided to undertake the audit of a GST registered person in accordance with the provisions of section 65 of this act, the proper officer shall issue a notice in FORM GST ADT01 in accordance with the provisions of sub-section (3) of the this section.
- The proper GST officer authorised to conduct audit of the records and the books of account of the gst registered person shall, with the assistance of the team of Goods and services tax officers and officials accompanying him, verify the documents on the basis of which the books of account are maintained and the GST returns/ other return and statements furnished under the provisions of the (CGST/SGST)Act and the (CGST/SGST) rules made thereunder, the correctness of the turnover, exemptions and deductions claimed, the rate of (GST) tax applied in respect of the supply of goods or services or both, the ITC availed and utilised, refund claimed, and other relevant issues and record the observations in his GST audit notes.
- The proper GST officer may inform the GST registered person of the discrepancies noticed, if any, as observed in the audit and the said person may file his reply and the proper GST officer shall finalise the findings of the audit after due consideration of the reply furnished.
- On conclusion of the audit, the proper officer shall inform the findings of audit to the GST registered person in accordance with the provisions of sub-section (6) of section 65 in FORM GST ADT-02.
Special GST Audit -Section 66 of the CGST/SGST Act
Special GST Audit.– Section 66 of the CGST/SGST Act read with Rule 102 of the CGST/SGST Rules, 2017
- If at any stage of GST scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of GST Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue is of the opinion that the value has not been correctly declared or the credit/ITC availed is not within the normal limits, he may, with the prior approval of the GST Commissioner, direct such GST registered person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the GST Commissioner.
The chartered accountant or cost accountant so nominated shall, within the period of 90 (ninety) days, submit a report of such GST audit duly signed and certified by him to the said GST Assistant Commissioner mentioning therein such other particulars as may be specified,: Provided that the Assistant Commissioner may, on an application made to him in this behalf by the GST registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by a further period of 90 (ninety)
- The provisions of sub-section (1) of this sec. shall have effect notwithstanding that the Books of accounts of the GST registered person have been audited under any other provisions of this Act or any other law for the time being in force.
- The GST registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of GST special audit under sub-section (1) of this section which is proposed to be used in any proceedings against him under this (CGST/SGST) Act or the rules made thereunder.
- The expenses of the examination and GST audit of records (Books of accounts and other document) under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the GST Commissioner and such determination shall be final.
- Where the GST special audit conducted under sub-section (1) results in detection of Goods and service tax not paid or short paid or erroneously refunded, or (ITC) input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 of CGST Act/ SCGST Act or section 74 of CGST Act of this act.
Rule 102 of the CGST/SGST Rules, 2017
Special Audit.-(1) Where special audit is required to be conducted in accordance with the provisions of section 66 of this act, the officer referred to in the said section shall issue a direction in FORM GST ADT-03 to the GST registered person to get his records audited by a chartered accountant or a cost accountant specified in the said direction.
(2) On conclusion of the special audit, the GST registered person shall be informed of the findings of the special audit in FORM GST ADT-04.