Analysis on GST Audit

Ashok Pitroda , Last updated: 27 January 2024 Share Follow on Google News

Quick Summary

A GST audit involves examining a registered person's records, returns, and documents to verify declared turnover, taxes paid, refunds, and input tax credit, ensuring compliance with GST laws. There are two main types: audits conducted by tax authorities under Section 65 and special audits by chartered or cost accountants under Section 66. The process includes specific forms for notices, reports, and communication of findings, with provisions for extending timelines and initiating recovery actions if discrepancies are found.

As per Section 2(13) of CGST Act, 2017, GST audit means the examination of records, returns and other documents maintained or furnished by the registered person under this act or the 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 input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder.

Understanding GST Audit: Types, Forms and Procedures

Types of Audit under GST

No	Audit u/s	Types of audit
1	65	Audit by tax authorities
2	66	Special audit

Here is a summary of the GST Audit forms

ADT - 01	Notice for conducting audit
ADT - 02	Audit report under section 65(6)
ADT - 03	Communication to the registered person for conduct of special audit under section 66
ADT - 04	Information of findings upon special audit

Audit u/s 65 | Audit by tax authorities

The Commissioner or any officer authorised by him, by way of a general or a specific order, may undertake audit of any registered person for such period, at such frequency. The officers conduct audit at the place of business of the registered person or in their office.The registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in form ADT - 01. The audit shall be completed within a period of three months from the date of commencement of the audit. Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months.

On conclusion of audit, the proper officer shall, within thirty days, inform the registered person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings, in form ADT - 02.

Where the audit conducted, results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74(demand and recovery related provisions).

Audit u/s 66 | Special Audit

If at any stage of scrutiny, inquiry, investigation or any other proceedings, 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 availed is not within the normal limits, the officer may, with the prior approval of the commissioner, direct such 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 commissioner.

The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit duly signed and certified by him to the said commissioner. Provided that the Assistant Commissioner may, on an application made to him in this behalf by the 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 ninety days.

The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit

The expenses of the examination and audit of records, including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the commissioner.

Where the special audit conducted, results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74 (demand and recovery related provisions).

Where special audit is required to be conducted in accordance with the provisions of section 66, the officer referred to in the said section shall issue a direction in FORM GST ADT-03 to the registered person to get his records audited by a chartered accountant or a cost accountant specified in the said direction.

On conclusion of the special audit, the registered person shall be informed of the findings of the special audit in FORM GST ADT-04.

FAQ :

A GST audit is the examination of a registered person's records, returns, and documents to verify the accuracy of declared turnover, taxes paid, refund claims, and input tax credit availed, and to assess compliance with GST provisions.

There are two main types of GST audits: Audit by tax authorities (Section 65) and Special audit (Section 66).

Tax authorities inform the registered person via notice (Form ADT-01) at least 15 working days before the audit. The audit is conducted at the business premises or office and should be completed within three months, with a possible extension of up to six months.

A special audit may be directed by an officer if, due to the complexity of the case and the interest of revenue, they believe the declared value is incorrect or credit availed is outside normal limits. This requires the Commissioner's prior approval.

A special audit is conducted by a chartered accountant or cost accountant nominated by the Commissioner. The expenses, including their remuneration, are determined and paid by the Commissioner.

After an audit, the proper officer informs the registered person of the findings, their rights and obligations, and the reasons for the findings within 30 days (using Form ADT-02 for regular audits or Form ADT-04 for special audits). If tax shortfalls are detected, action may be initiated under Section 73 or 74.

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