What is an GST Audit?

As per Section 2(13) of CGST Act, 2017‘audit’ means the examination of records and other documents maintained or furnished by the registered person under this Act or rules made there under 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 there under.

Under GST Audit would be done in Two Ways:

• Section 65 (compulsory audit by tax authorities)
  under Section 66 (special audit by chartered accountant or cost accountant)

Compulsorily Audit

Compulsorily Audit [Section 35(5) of the CGST Act, 2017 read with rule 80(3) of the CGST Rules, 2017] Section 35(5) of CGST Act 2017: Every registered person whose turnover during a financial year exceeds the prescribed limit (2 crore) shall get his accounts audited by a Chartered Accountant or a Cost Accountant and shall submit

• a copy of the audited annual accounts,
• the reconciliation statement under sub-section (2) of section 44 and
• such other documents in such form and manner as may be prescribed.

Reconciliation statement

Reconciliation statement reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement and such other particulars as may be prescribed.

Requirement of audit

As per Rule 80(3) of the CGST Rules, 2017,every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

GSTR 9C should be filed by the taxpayers whose annual turnover exceeds Rs 2 crores during the financial year.

Section 65 of CGST Act 2017 – Audit by Tax Authorities:

The commissioner or any officer authorized by him by way of a general or specific order, may undertake audit of any registered person for such period at such frequency and in such manner as may be prescribed.

GST Officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or in their office.

The GST Registered person shall be informed by way of a notice not less than fifteen working (15) days prior to the conduct of audit in such manner as may be prescribed.

Audit under sub-section (1) shall be completed within a period of three months (3) 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 (6) months.

Commencement of Audit means the date on which the records and other documents called by the tax authorities are made available by the registered person or the actual institution of audit at the place of business, whichever is later.

GST Audit By Tax authorized officer

During audit, the authorized officer may require the registered person:-

• to afford him the necessary facility to verify the books of account or other documents as he may require
• for furnish such information as he may require and render assistance for timely completion of the audit.
• On conclusion of audit, the proper officer shall, within 30 days inform the registered person whose records are audited about the findings his rights and obligations and the reasons for such findings.

Where the audit conducted under sub section 1 results in deduction of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized the proper officer may initiate action under section 73 or section 74.

Under Section 73 of CGST Act 2017 Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts.

Section 74 of CGST Act 2017 Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts.

Section 66 of CGST Act 2017 – Audit of Special Audit:

If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of 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 availed is not within the normal limits, he 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 (90) days, submit a report of such audit duly signed and certified by him to the said 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 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 (90) days.

The provisions of sub-section (1) shall have effect notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force.

Opportunity of being heard

GST Registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-section (1) which is proposed  to be used in any proceedings against him under this Act or the rules made there under.

The expenses of the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final.

Where the special audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized, the proper officer may initiate action under section 73 or section 74.

Time limit for issuance of notice for sec 73 in GST extended

• Much Awaited Official Update: Time limit extended for issuance of SCN and passing of order in non-fraud cases for FY 2018-19 and 2019-20 Deadline limit for issuance of Goods and Services Tax Notice for section 73 in Goods and Services Tax Extended For Financial Year 2018-19 – Extended date is 30.04.2024. For Financial Year 2019-20 – Extended date is 31.08.2024.
• • For Financial Year 2018-19 – Extended date is 30.04.2024
  • Similarly for Financial Year 2010-20 – Extended date is 31.08.2024
• For the details Reference notification no 56/2023 dt 28.12.23.