Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 28-12-2017 – Meaning of audit According to section 2(13) of the GST Act, 2017, audit means detailed examination of records, returns and other documents maintained or furnished by the taxable person under this Act or Rules made thereunder or under any other law for the time being in force to verify, inter alia, 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 rules made there under. Accordingly, audit implies – (a) detailed examination of records, returns and other documents – (i) maintained/furnished by a taxable person, (ii) under GST law/any other law or rules; (b) Verification of correctness of – (i) turnover declared; (ii) taxes paid. (iii) refund claimed, and (iv) input tax credit availed; (v) Assessment of compliances with provisions of GST law and rules. The relevance of audit is much more where self asse
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or ● taxable person fails to take corrective action/measures after accepting the discrepancies, proper officer may initiate appropriate action against such taxable person which may include – ● audit by tax authorities under section 65 ● special audit under section 66 ● inspection, search or seizure under section 67 ● proceed to determine tax and other dues under section 79 providing for recovery of dues. Audit by tax authorities According to section 65 of the GST Act, 2017 in relation to audit in GST regime, following points are worth noting – (i) who can authorize/conduct audit – commissioner of GST or commissioner of SGST or officer authorized by him by an order (general or specific); (ii) audit of what – business transactions of any taxable person; (iii) audit when – after at least 15 days advance notice; (iv) how audit will be done – to be carried out in a transparent manner. Period to be covered, frequency and manner to be prescribed; (v) where audit
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al order or specific order; (e) shall specify period of audit; (f) shall specify frequency of audit; (g) shall prescribe manner of undertaking audit. Surprise element in audit As per section 65(3), it has been stipulated that for the audit, taxable person shall be informed, by way of a notice, sufficiently in advance, not less than fifteen working days, prior to the conduct of audit in the manner prescribed. Information regarding audit As per sub rule (2) of rule 101 of the GST Rules, 2017 where it is decided to undertake the audit of a registered person in accordance with the provisions of section 65, the proper officer shall issue a notice in FORM GST ADT-01 inaccordance with the provisions of sub-section (3) of the said section. Audit – mandatory or discretionary Audit under section 65 of the GST Act, 2017 is a discretionary audit and shall be carried out only in cases where such audit of business transaction as is deemed proper, in the given set of facts and circumstances. The audi
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ords made available 20 December 2017 Date of actual institution of audit at auditee s place 5 January, 2018 The date of commencement of audit will be taken as 5 January, 2018 Date by which audit should be completed in normal course 4 April, 2018 Last date by which audit should be completed (including extended period) 4 October, 2018 Outcome of audit under section 65 On completion of audit under section 65, proper officer is required to do the following without delay – (a) inform the audit findings to the taxable person whose records have been audited (b) Inform the taxable person of his rights and obligations (c) Inform the taxable person the reasons for the audit findings (d) Initiate action under section 73, ie determination of tax not paid or short paid or erroneously refunded, if the audit results in detection of (i) tax not paid or short paid, or (ii) tax erroneously refunded, or (iii) input tax credit erroneously availed. Time limit for disclosing the audit findings to auditee As
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e noted that in Central Excise and Service Tax, Excise Audit and Service Tax audit was carried out by way of verification and scrutiny by audit Commissionerate, though there was no specific provision for audit by departmental officers. Rule 5A of Service Tax Rules, 1994 provides that commissioner or audit team of Comptroller and Auditor General of India can visit the assessee s premises for audit purposes. Difference between the two audit under sections 65 and 66 Following comparison can be made out between audits under sec 65 and 66 of the GST Act, 2017: Issue Audit under section 65 Audit under section 66 Statutory provisions 65 66 Trigger point General audit; audit of business transactions, no specific reason to be cited Nature & complexity of case, interest of revenue, incorrect value of supply or abnormal availment of credit Nature of audit Departmental audit Special audit Conducted by Officers of department authorized by commissioner Chartered accountant/cost accountant appoin
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