Writing GST the Anand Bakshi Way - Simple Words, Lasting Impact
When I started writing articles about GST, I quietly promised myself to make even the most complex provisions feel like a friendly chat rather than a confusing puzzle. I truly believe that when the law is explained simply, it can reach more people and genuinely touch their hearts. My recent article, "How Long Must You Keep Books of Account under GST," received a warm response from over 9,803 readers so far, reminding me that clarity and honesty always have an audience. It motivated me to keep going with my series on "Common-Interest Topics under GST," where I aim to explain each concept-whether about compliance or caution-in a friendly, easy-to-understand way that anyone, even those unfamiliar with technical details, can appreciate and remember.
This belief is inspired by my all-time favourite lyricist - Late Anand Bakshi Ji, a true master of words who gave emotions a vocabulary that anyone could sing along to. He showed us that true greatness is often found in simplicity and that the deepest truths are often expressed through the lightest words. When he wrote, "कुछ तो लोग कहेंगे, लोगों का काम है कहना…" (Film: Amar Prem), he beautifully summed up patience and self-belief, showing that sometimes, a single line can say more than long essays.
Did you know that Anand Bakshi Ji's formal education ended after eighth grade due to personal reasons? Yet, it's incredible how he went on to write thousands of timeless songs-songs that still resonate in our hearts with their simple, relatable, and deeply human words. This truly touched my heart and reminded me that the depth of expression isn't about formal degrees, but about clear thoughts and genuine emotions. Inspired by this, I have committed to writing all my GST articles in simple, easy-to-understand language-words that anyone, whether a student, an entrepreneur, a young avid reader from a different stream, a retired person, a home maker, or a professional, can easily grasp. After all, the complex provisions and rules of GST should feel less like technical obstacles and more like practical lessons in business life.
There is a strong and natural link between maintaining accounts, assessment, and audit under GST. Records serve as the foundation; assessment involves evaluating the data; and audit serves as the final check to ensure everything is accurate and transparent. Since I have already shared detailed articles on "How Long Must You Keep Books of Account under GST," and "Six Types of Assessment under GST- From self-belief to Summary Action", this article will focus mainly on the two statutory types of audit recognised by law - the Audit by Tax Authorities [popularly known as Departmental Audit) (Section 65 of the CGST Act, 2017) and the Special Audit (Section 66 of the CGST Act, 2017). However, if you have not read my earlier articles yet, I highly recommend checking them out first to get a complete understanding of the background. Each concept naturally connects to the next, like scenes in a continuous story.
A simple example helps clarify this connection. Imagine someone heading to the theatre to watch a movie, only to arrive 30 minutes late. No matter how great the movie is - with its music, acting, and story - the latecomer can't enjoy it as fully as someone who's been there from the very first scene. Similarly, without understanding the earlier chapters of books of accounts and assessment, it can be hard to truly grasp the depth and purpose of an audit under GST.
Now, coming back to Anand Bakshi Ji, if he could express profound philosophies of life in lines like " मेरे सपनों की रानी कब आएगी तू, आई रुत मस्तानी कब आएगी तू, बीती जाए ज़िंदगी की रानी, कब आएगी तू, चली आ… तू चली आ…" (Film: Aradhana- 1969), then why can't we make tax laws sing with the same simplicity, clarity, and rhythm? The goal is not just to explain, but to connect - not merely to inform, but to inspire. And so, today's topic - Departmental Audit and Special Audit Under GST - When the Law Listens - is shared in that same musical spirit, not as a stern warning but as a friendly tune of trust and openness between the taxpayer and the tax administration.
"ये ऑडिट भी क्या चीज़ है, समझ लो ज़रा प्यार से,गलतियों को सुधार लेना, क़ानून के इज़हार से…"
Just like every beautiful song is guided by rhythm and harmony, GST audits are thoughtfully designed to bring purpose and balance. They are not to intimidate but to help every business stay in tune with the nation's economic symphony.
TWO TYPES OF AUDIT
(1) Audit by Tax Authorities (Departmental Audit) (Section 65 of the CGST Act)
(2) Special Audit (Section 66 of the CGST Act)
Let us see both not just as mechanical steps, but as vital movements in the beautiful symphony of compliance-where understanding turns into confidence and awareness fosters peace of mind.
(1) AUDIT BY TAX AUTHORITIES (DEPARTMENTAL AUDIT) - जब कानून खुद दरवाज़े पर दस्तक देता है (Section 65 read with Rule 101 of the CGST Rules, 2017)
There is a clear and logical connection between Section 35, Section 59, and Section 65 of the CGST Act. First, a registered person is required under Section 35 to keep accurate and truthful records of all transactions related to outward and inward supplies, input tax credits, and other necessary details. Using these records, Section 59 guides each registered person to assess their own tax payable and submit a return for each tax period. Following this, Section 65 gives the Commissioner or any authorised officer the power to check the accuracy of this self-assessment through an Audit by the Tax Authorities. This process ensures that record-keeping and self-assessment are part of a trustworthy, transparent system that upholds honesty and accountability.
Section 65(1) states that the Commissioner or any authorised officer has the flexibility to conduct audits on registered persons, including choosing the period, frequency, and method as prescribed. Additionally, Rule 101(1) supports this process by requiring the officer to send a notice in Form GST ADT-01 at least 15 working days before the audit, giving everyone enough time to prepare and ensuring transparency.
Section 65(2) provides flexibility for the audit to take place either at the registered person's place of business or at the tax office, depending on the type and amount of records involved. During the audit, officers may review books, returns, invoices, and documents with care. Meanwhile, Rule 101(2) kindly requests that the taxpayer provide facilities, assistance, and information to make the process smoother. Additionally, Rule 101(3) allows the audit to be conducted by a single officer or a team, ensuring a fair, professional, and well-balanced process.
Before starting, Section 65(3) requires giving prior notice as mentioned above. Section 65(4) usually requires the audit to be completed within 3 months of the start date. However, the proviso allows the Commissioner, for valid reasons recorded in writing, to extend this period by up to 6 months. The Explanation to Section 65(4) helps clarify that the "commencement of audit" refers either to the date when the taxpayer provides records and documents or when the audit truly begins at the business premises-whichever is later.
During the audit, Section 65(5) highlights the importance of the registered person providing the necessary facilities to verify records and to share information or assistance needed for a smooth, timely process. It truly embodies the spirit of cooperation between taxpayers and tax authorities, working together to ensure accuracy and fairness.
Once the audit is complete, Section 65(6) requires the findings to be shared with the taxpayer using Form GST ADT-02. This form includes details about any discrepancies and explanations for the differences. Importantly, this communication also helps the registered person understand their rights and responsibilities Section 65(7) provides that if the audit reveals any short payment, non-payment, or wrongful availment of input tax credit, the proper officer may initiate proceedings under Section 73 or Section 74 for financial years up to 2023-24, and under Section 74A for financial years 2024-25 onwards, as applicable."
Looking at it from a whole perspective, the audit under Section 65 read with Rule 101 feels like a friendly health check-up for the taxpayer's compliance system - it is not about catching faults, but about gently reminding us that law and discipline go together. When done well, an audit can boost confidence, encourage transparency, and foster a stronger, more trusting relationship between businesses and the government.
"ज़िंदगी के सफ़र में गुज़र जाते हैं जो मुकाम, वो फिर नहीं आते…"(फ़िल्म: आप की कसम, 1974 - आनंद बक्षी जी)
Bakshi Ji's poetic reminder that each moment, once gone, never comes back, encourages us to cherish every opportunity for honest compliance before it's too late. Similarly, Departmental Audit teaches us this lesson: approach it with clarity, cooperate sincerely, and face the future with confidence. That's genuinely the harmony of law.
(2) SPECIAL AUDIT - जब गहराई में झाँकना ज़रूरी हो जाता है (Section 66 of the CGST Act, 2017 read with Rule 102 of the CGST Rules, 2017)
While Section 65 allows tax authorities to conduct a general audit, Section 66 introduces the option of a Special Audit. This in-depth review is needed when accounts are particularly complex or transactions are unusual. Think of a special audit as calling in a specialist when a routine check-up reveals symptoms that need closer inspection. It is not about suspicion but about taking extra care-making sure that both the registered person and the Department work together to achieve a clear understanding of the tax situation through expert verification.
Section 66(1) states that during any review, inquiry, investigation, or other proceedings, if any officer of not below the rank of Assistant Commissioner, believes that the declared value is incorrect or that the input tax credit claimed is unusually high, he can, with the prior approval of the Commissioner, instruct the registered person to have their records, including books of accounts, examined and audited by a Chartered Accountant or Cost Accountant appointed by the Commissioner. This process helps the Department handle complex or uncertain transactions confidently, relying on expert technical analysis rather than guesswork.
Under Section 66(2), the nominated professional must submit the audit report within 90 days of receiving the direction. The proviso gives the Commissioner the flexibility to extend this deadline by an additional ninety days, whether upon request from the registered person or the nominated professional, or for any critical and valid reason. Unlike Section 65(4)-which allows an extension "up to" six months-this proviso specifies an extension of "by ninety days," providing more apparent procedural certainty and accountability.
Additionally, Section 66(3) clarifies that the provisions for a special audit under Section 66(1) still apply even if the registered person's accounts have already been audited under other parts of this Act - for example, through an audit under Section 65 - or under other laws in force, like the Companies Act or the Income-tax Act. Even if the accounts have been audited elsewhere, the Department can still order a Special Audit under Section 66 if it finds it necessary to protect revenue. The reason is simple: each audit serves its own purpose and focus, and when more detailed scrutiny is needed, the law allows the Department to bring in experts without being limited by previous audits.
Section 66(4) ensures fairness by requiring that, before any material collected during a special audit is used against the registered person, the registered person is given a fair opportunity to be heard. This reflects the timeless principle of natural justice-nobody should be condemned without being heard. Additionally, Section 66(5) states that the expenses of the special audit, including the fees for a Chartered Accountant or a Cost Accountant, will be determined and paid by the Commissioner, not the registered person. This helps maintain fairness and avoids any bias or undue influence in the audit process.
Finally, Section 66(6) provides that if a special audit uncovers any underpayment, non-payment, or wrongful claim of input tax credit, the proper officer may initiate proceedings under Section 73, Section 74, or Section 74A, as appropriate. It is helpful to remember that Sections 73 and 74 still govern cases for financial years up to 2023-24. Meanwhile, Section 74A, introduced by the Finance Act, 2024 (which comes into effect on October 1, 2024), will apply to financial years from 2024-25 onwards. This new section establishes a unified framework for tax assessment and recovery, particularly in cases involving fraud, suppression, or intentional misstatement identified during audits.
Procedurally, Rule 102 of the CGST Rules, 2017 offers the essential framework. Under Rule 102(1), a special audit is initiated through Form GST ADT-03, and Rule 102(2) provides that once the audit is completed, the results are shared using Form GST ADT-04, including reasons and observations. These official communications help maintain complete transparency and create a clear documentary trail for both the registered person and the Department at every step.
Looking at it as a whole, the Special Audit under Section 66 represents a significant step towards greater accountability-serving as a vital link between detailed accounting and legal checks. It is used when regular audits or reviews might not capture all the necessary details, and having independent experts involved adds a layer of objectivity, expertise, and trustworthiness to the process.
"कोरा कागज़ था ये मन मेरा, लिख दिया नाम उस पे तेरा…"(फ़िल्म: अराधना, 1969 - आनंद बक्षी जी)
Just like Anand Bakshi Ji's timeless line enriches a blank page into something meaningful, the Special Audit also brings certainty to what was once uncertain. It is where law and professionalism come together-making complex things more transparent and turning suspicion into confidence.
When the Law Listens, But the Heart Must Respond
So far, we've explored two types of audits in which the law examines you - one conducted by the Department and another by independent professionals. However, the most significant audit happens when you take a good, honest look at yourself. The GST framework embodies this more profound truth through Section 44, where the registered person essentially becomes his own auditor, checking his own honesty before anyone else does. In the next article, we shall explore that inner dimension of compliance - the self-audit - and discover how approaching the law with sincerity and self-awareness can turn it from a burden into a blessing.
"चलते चलते, मेरे ये गीत याद रखना…"(फ़िल्म: चलते चलते, 1976 - आनंद बक्षी जी)
These timeless words really beautifully highlight the ongoing commitment and integrity we uphold. hold dear - reminding us that every genuine effort creates a meaningful melody. Similarly, each act of honest compliance turns into a song of responsibility that resonates well beyond the completion of the audit.
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