GST is a trust based taxation regime wherein the assessee
is required to self-assess his returns and determine tax liability without any
intervention by the tax official.Therefore a tax regime that relies on
self-assessment has to put in place a robust audit mechanism to measure and
ensure compliance of the provisions of law by the taxable person.
“Audit” means
the examination of records, returns and other documents maintained or furnished
by the registered person under this Act or the 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.
GST law
prescribed following three types of Audit.
1. The first type of audit is to be done by a chartered
accountant or a cost accountant;
2. Seconded type of audit is to be done by the
commissioner or any officer authorised by him in terms of Section 65 and 66 of
the CGST Act, 2017
3. The third type of audit is called the Special Audit
and is to be conducted under the mandate of Section 66 of CGST Act, 2017 read
with Rule 102 of CGST Rules, 2017.
1. Audit by a Chartered Accountant or a
Cost Accountant – Section 35(5) of the CGST Act/ SGST Act read with Rule
80(3) of the CGST/SGST Rules, 2017
Every registered person whose turnover during a
financial year exceeds the prescribed limit of Rs. 2 Crore shall get
his accounts audited by a Chartered Accountant or a Cost Accountant.
It is to be noted very carefully here that though
in Section 35(5) the term “turnover” has been used, yet it shall
mean “aggregate turnover”.
The term “aggregate turnover” has been defined as under
vide Section 2(6) of the CGST Act/SGST Act:
“aggregate turnover” means the
aggregate value of all taxable supplies (excluding the value of inward supplies
on which tax is payable by a person on reverse charge basis), exempt supplies,
exports of goods or services or both and inter-State supplies of persons having
the same Permanent Account Number, to be computed
on all India basis but excludes central tax, State tax, Union territory tax,
integrated tax and cess.
2. GST Audit by Department – Section
65 of the CGST/SGST Act
The Commissioner or an officer authorised by him, may
undertake audit of any registered person by issuing a general order or a
special order. General Order shall specify the criteria and all the
registered persons fulfilling that criteria shall get covered in the ambit of
audit. On the other hand, Special Order for audit shall be issued in
the name of a particular registered person and only such person shall be made
subject to audit. Further, the authorised officer may conduct Audit either
at the place of business of the registered person or in his own office.
It is worth emphasizing here that the authorized
officer, during the course of audit, may require the registered person to:
(i) Afford him necessary facility to verify the
books of account or other documents required by him;
(ii) Furnish such information as may be required by him
for the conduct of audit, and to provide assistance for timely completion of
audit.
Time limit for audit
It is also pertinent to add here that audit of a
registered person shall be completed within three months from the
date of commencement of audit.
The expression ‘commencement’ shall mean the date on
which the books of account, records and other documents, asked for by the tax
authorities, are made available by the registered person or the date of actual
institution of audit at the place of business, whichever is later.
Extended of time limit
However, if the Commissioner is satisfied that audit of
the registered person cannot be completed within three months, he may extend
the time period for a further period not exceeding six months after
recording the reasons for doing so in writing.
3. Special GST Audit -Section 66 of the
CGST/SGST Act
If at any stage of scrutiny, enquiry, 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 nominated by
the Commissioner shall, within a period of 90 days from the date of
his nomination, furnish the Audit Report to the Assistant
Commissioner on whose direction audit is conducted.
However, the
aforesaid period of 90 days may be extended by the Assistant
Commissioner on his own motion, or on an application made by the registered
person or the Chartered Accountant or Cost Accountant nominated by the
Commissioner, for material and sufficient reason.
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