AUDIT PROVISIONS UNDER GST
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 28-12-2017<\/p>\n
Meaning of audit
\nAccording 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.
\nAccordingly, 'audit' implies –
\n (a) detailed examination of records, returns and other documents –
\n (i) maintained\/furnished by a taxable person,
\n (ii) under GST law\/any other law or rules;
\n (b) Verification of correctness of –
\n (i) turnover declared;
\n (ii) taxes paid.
\n (iii) refund claimed, and
\n (iv) input tax credit availed;
\n (v) Assessment of compliances with provisions of GST law a<\/p>\n
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\n ● explanation furnished is not found satisfactory, or
\n ● taxable person fails to take corrective action\/measures after accepting the discrepancies,
\nproper officer may initiate appropriate action against such taxable person which may include –
\n ● audit by tax authorities under section 65
\n ● special audit under section 66
\n ● inspection, search or seizure under section 67
\n ● proceed to determine tax and other dues under section 79 providing for recovery of dues.
\nAudit by tax authorities
\nAccording to section 65 of the GST Act, 2017 in relation to audit in GST regime, following points are worth noting –
\n (i) who can authorize\/conduct audit – commissioner of GST or commissioner of SGST or officer authorized by him by an order (general or specific);
\n (ii) audit of what – business transactions of any taxable person;
\n (iii) audit when – after at least 15 days advance notice;
\n (iv) how audit will be done – to be carried out in a transpa<\/p>\n
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\n(b) shall be in writing;
\n(c) may authorize any officer to undertake audit;
\n(d) may be general order or specific order;
\n(e) shall specify period of audit;
\n(f) shall specify frequency of audit;
\n(g) shall prescribe manner of undertaking audit.
\nSurprise element in audit
\nAs 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.
\nInformation regarding audit
\nAs 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.
\nAudit – mandatory or discretionary
\nAudit under section 65 of the GST Act, 2017 is a discretionary audit and shall be carried out only <\/p>\n
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\nExample:
\nDate on which documents requested
\n1 December 2017
\nDate of which documents\/records made available
\n20 December 2017
\nDate of actual institution of audit at auditee's place
\n5 January, 2018
\nThe date of commencement of audit will be taken as
\n5 January, 2018
\nDate by which audit should be completed in normal course
\n4 April, 2018
\nLast date by which audit should be completed (including extended period)
\n4 October, 2018
\nOutcome of audit under section 65
\nOn completion of audit under section 65, proper officer is required to do the following without delay –
\n(a) inform the audit findings to the taxable person whose records have been audited
\n(b) Inform the taxable person of his rights and obligations
\n(c) Inform the taxable person the reasons for the audit findings
\n(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 sho<\/p>\n
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\nIt may be 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.
\nDifference between the two audit under sections 65 and 66
\nFollowing comparison can be made out between audits under sec 65 and 66 of the GST Act, 2017:
\nIssue
\nAudit under section 65
\nAudit under section 66
\nStatutory provisions
\n65
\n66
\nTrigger point
\nGeneral audit; audit of business transactions, no specific reason to be cited
\nNature & complexity of case, interest of revenue, incorrect value of supply or abnormal availm<\/p>\n
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