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Recently ICAI recommended the draft audit report format in form 9Cto the minister of finance, which is in addition to the form GSTR-9D, placing the additional reporting requirement on the auditors. After going through the reporting requirement in form 9C and Form 9D it seems the GST auditor going to have a tough task in conducting the GST audit and filing of required annexures can only be possible after voucher level verification. In the draft audit report the auditor has to confirm that he has:

  1. obtained all the required information and explanations
  2. verified the relevant returns and statements under the GST Laws
  3. the books of account and other related records and registers maintained by the registered person are sufficient for the verification in terms of the correctness, completeness
  4. the annual return filed by the registered person reflects are true and correct
  5. the aggregate of outward supplies declared in the returns for the year include all the outward supplies effected during the year
  6. the aggregate of inward supplies declared in the returns for the year include all the inwards supplies effected during the year
  7. the transactions included / excluded from the value of supply are in accordance with the law
  8. the adjustments to the outward supplies and taxes are based on the entries made in the books of account maintained for the year
  9. the adjustments to the inward supplies and taxes are based on the entries made in the books of account maintained for the year
  10. Correct exemptions and abatements claimed in the annual return
  11. Ineligible credit have been dealt appropriately in the return during the year
  12. classification of outward supplies, rate of tax applicable and computation of output tax (including that of inward supplies liable to tax on reverse charge basis) re in conformity with the GST
  13. the amount of input tax paid on inward supplies and deductions of input tax credit claimed are in conformity with the provisions of law
  14. other information given in the relevant Form 9D and annexures there to are correct and complete

In addition to the above the auditor must quantify the following differences as per the annual return and the amount determine during the audit along with the reason of such differences:

  1. Net outward supplies after considering the return of supplies on which output tax is payable
  2. Output tax payable including interest, fee, penalty and other levies as per the respective act
  3. Net inward supplies on which input tax credit has been taken
  4. Tax payable (including interest, fee, penalty and other levies) on reverse charge inward supplies
  5. Net input tax credit claimed on inward supplies considering all the reversals, reductions and reclamations of input tax credit
  6. Refund claimed
  7. Net outward supplies on which no output tax is payable
  8. Net inward supplies (including reverse charge inward supplies) on which no input tax credit has been taken

In addition to the above audit report the GST auditor shall furnish the audit form 9D. Mentioning the details of almost next to everything and for obtaining the required information he has to go at the voucher level. Some details/information that are required in the audit form 9D (Part-B) are:

  1. Supplies effected by the registered person not considered in return
  2. Value of non-taxable supplies which have not been considered in the return
  3. Details of composite and mixed supplies not determined in accordance with Section 8 of the CGST Act 2017
  4. Transactions reported in GST returns though they are covered under Schedule III or excluded from the definition of supplies
  5. Inward supplies liable to tax on RCM on account of supplies made by unregistered persons u/s 9(4)
  6. Details of inward supplies on which tax payable under reverse charge mechanism (RCM) has not been remitted
  7. Summary of exempted supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect classification
  8. Incorrect classification of outward supplies/inward supplies liable to reverse charge
  9. Details of transactions where tax has not been paid in accordance with the provisions of time of supply
  10. Details of transactions on which the effect of change in rate of tax has not been provided
  11. Details of outward supply of services where services ceases prior to completion but not taxes discharged
  12. Details of supply of goods on ‘sale on approval basis’ exceeding the time limit of 6 months and not offered to tax.
  13. Details of transactions where transaction value is not accepted and value of supply is based on Rule 27 - 31 of CGST Rules 2017
  14. Details of transactions wherein the value of supply has been incorrectly determined u/s 15(2) of the CGST Act 2017
  15. Details of discounts adjusted in contravention with Section 15(3) of the CGST Act 2017
  16. Details of transactions wherein the value of supply has been incorrectly determined u/r 31A/32 of the CGST Rules 2017
  17. Details of supplies where the provisions of Rule 33 of CGST Rules 2017 in respect of pure agent have been contravened
  18. Details of ineligible input tax credit availed during the year
  19. Details where apportionment of credit has not affected in terms of section 17(2) of the CGST Act 2017 read with Rule 42 and 43 of the CGST Rules 2017
  20. Cases where inputs and capital goods have not been received within the prescribed time limit and no tax has been offered on them
  21. Reclaim of Tax credit without full/part payment to the supplier
  22. Details of transactions where the credit has not been reversed u/s 16(2) of the Act read with Rule 37 on account of non payment of consideration and tax
  23. Details where apportionment of credit has not affected in terms of section 17(2) of the CGST Act 2017 read with Rule 42 and 43 of the CGST Rules 2017
  24. Date of filing of returns / forms
  25. Details of interest on delayed payment of taxes which have not been remitted
  26. Details of tax collected but not deposited with the Government

In addition to the above annexures the following information shall also be provided along with the supporting reasons:

  1. Whether e-waybills are applicable in case of movement of goods caused by the registered person during the period under audit? If yes, whether all the movements have been made using proper ewaybills?
  2. Whether any goods have been subject matter of detention/seizure or confiscation as per Section 129 and 130 of the CGST Act 2017 on which any tax, interest or penalty has been determined as payable as per the order of the proper officer? If yes, whether the said liability has been discharged?
  3. Basis of identification of the location of the recipient, in case of supply of services, if Place of Supply determined u/s 12(2) or 13(2) of the IGST Act, 2017
  4. Whether the rate of exchange for determining the value of imports/exports of goods*/ services are considered in accordance with Rule 34 of the CGST Rules, 2017?
  5. Whether the registered person has reversed any output tax liability on account of bad debts?
  6. Whether the records maintained by the registered person facilitate verification as to whether the goods / services had been received before the end of the month for which credit is availed?
  7. Whether on 1st July, 2017 transition credits have been availed in contravention of Section 139 to 142 of the Act
  8. Whether all the certificate(s) required under the section 18, has / have been obtained?
  9. Whether there are any mismatches between the electronic cash ledger and electronic credit ledger viz a vis records /books of accounts?
  10. Whether the provisions of TDS and TCS are applicable to the registered person during the period covered under audit? If yes, whether these provisions have been adequately complied with?
  11. Where the registered person is eligible for refund under Section 54 of the Act, specify under which cases refund has been claimed? Whether the registered person has claimed any transition credit as well as refunds under the erstwhile laws.
  12. Whether the registered person has issued the following documents in accordance with the act and rules framed thereunder:      
    1. Tax invoice u/s 31 and u/r 46 and Invoice cum bill of supply u/r 46A
    2. Tax invoice on inward supplies from unregistered persons u/s 31 and u/r 46
    3. Bill of Supply u/s 31 and u/r 49
    4. Receipt voucher u/s 31 and u/r 50
    5. Refund voucher u/s 31 and u/r 51
    6. Payment voucher u/s 31 and u/r 52
    7. Revised tax invoice, Credit Note and debit note u/s 34 and u/r 53
    8. Delivery challan u/r 55
  13. Whether the registered person has given any affect to advance ruling order?
  14. Whether the order of Advance ruling authority is proposed to be followed in the subsequent years? If not, please indicate the deviation.
  15. Details of the different ratios required:
    1. Gross Profit to turnover in State
    2. Net Profit to turnover in State
    3. Cash payment of Taxes / Total Payment of Taxes
    4. Related party turnover / Total Turnover
    5. Output Tax paid to Outward Taxable supplies
    6. Output tax as per return/Total tax liability as determined under audit
    7. Inward supply from unregistered persons to Net Inward Supplies

The department has burdened the GST auditors with huge responsibility, even going through the form 9C or form 9D one question will come in the mind of almost all the GST auditor for sure and it is:

Client or Quality?

There are very few companies which have such level of accounting practice and accounting/MIS software which can fetch the required data/information.

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