Audit and Consultation

GST – Audit and Consultation

Since introduction of GST, we have seen diverted focus of GST department towards the inclusion of more and more critical compliances in GST. More stress of the GST council is now on pulling up reporting standards for taxpayers in GST adding in compilation of input and output credit, re-conciliations, preparation and filing of annual account statements/returns and receipt of GST audit certificate.

All these compliances are strictly improving audit/assessment and scrutiny processes under the GST law.

The law now also prescribes for multiple audits to be conducted by entities either by appealing to some authority or by appointing an external auditor. Under the GST Act, the following types of Audits have been mandated for businesses :

Section 65 – Audit by Commissioner
Section 66 – Special Audit
Audit conducted by an associated CA professional (Form 9C and Form 9D)

Section 65 – GST Audit by Commissioner/Department

The commissioner or on his order an officer at any time can conduct a comprehensive audit of records of business of the taxpayer for reconciliation of GST liabilities. Under this audit, the taxpayer is obliged to provide all necessary books of accounts and documents required for timely completion of the audit.

Section 66 – Special Audit

The officer so appointed by the commissioner, with his prior permission can at any time also conduct a special audit of the books of the taxpayer with specifying the reasons for the audit to the authorities. Seeking for the complexity of the case, the officer can further appoint a Chartered Accountant or CMA to conduct the audit.

Self Assessment and Audit

As stated under Section 35(5) of the GST Act, every registered entity on passing the exemption limit of turnover i.e below Rs 2 crore have to get its accounts audited by a practicising Chartered Accountant or CMA and submit a copy of such audit to the tax department while filling the GST returns as attachment.

GST Assessment and Adjudication

The GST Act also grants powers to the officer so appointed to assess the liability of the taxpayer arising out of any certain event which he fails to assess and report to government.

– Self Assessment – On self-assessment of tax liabilities the taxpayer is required to file a GST return for each tax period. He is required to file an annual return using GSTR 9 along with other reconciling declarations and returns forms.

– Summary Assessment – The officer on scrutiny of records of the taxpayer can establish a liability on the taxpayer against a certain event which the taxpayer failed to report in his records believing on the grounds that ignorance to such will affect the interest of revenue.

– Provisional Assessment – The taxpayer can request the officer to provisionally determine the tax liability if he is unable to find the value of good or service when unable to determine the rate of good or service.

– Scrutiny Assessment: The officer at any time can scrutinize records of the taxpayer to verify the correctness of the figures imputed during filling of GST returns and inputs availed. On non-compliance or reporting of misguided facts, the officer then can issue an order of special audit.

Recovery and Advance Ruling

The proper officer can issue a show cause notice to the taxpayer for reporting of the additional tax liability built out of the scrutiny of events and pay the required tax along with a specified penalty.

Seeking for clarification on the penalties imposed, actions taken or assessment of liabilities, the taxpayer can ask the authority for GST provisioning matters. Freedom to such facility has been provided under the Advance Ruling provision of the GST Act.

Administration of GST Audit provisions requires compliance following of all rules and regulations defined under Audit section of the GST Act, any disobedience of which can bring huge penalties on the taxpayer.