GST AUDIT | Goods and Services Tax Audit Mechanism
GST is a mutual trust based taxation system in which the taxable person is required to self-assess his returns and determine tax liability without any intervention by the GST official.Therefore a tax system that relies on self-assessment has to put in place a robust ” Audit Mechanism “to measure and ensure compliance with the provisions of law by the assessee.
Definition of Audit u/s 2(13) of the CGST Act 2017
GST Audit is that “the examination of records, returns and other documents maintained or furnished by the registered person under the GST Acts or the rules made thereunder 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 the GST Acts or the rules made thereunder.”
Circumstances in which GST Audit required
There are three conditions are given when GST Audit is being conducted.
- If Turnover exceeds 2.oo Cr (Two Crores )
- Normal Audit by Commissioner or Person Authorized by commissioner
- Special Audit (when assessee directed by Tax Authority )
1.The first GST Audit will be done by a Chartered Accountant or a Cost Accountant. Taxable Person whose aggregate turnover during a financial year exceeds two crore rupees has to get his accounts audited by a chartered accountant or a cost accountant and furnish a copy of audited annual accounts and a reconciliation statement,duly certified,in FORM GSTR-9C.
2. Second GST Type which is the Normal GST Audit, The Commissioner or Authorized Tax officer can undertake the GST audit of any registered person for such period, at such frequency in the prescribed manner.
3. The Third Type of audit is called the ” Special Audit “. In Special Audit the Taxable person can be ordered to get his records including books of account examined and audited by a chartered accountant or a cost accountant during any stage of Scrutiny, Inquiry, Investigation or Any other Proceedings, Depending upon the Complexity of the Case.
Procedure
- During the “Scrutiny, Inquiry, Investigation or Any Other Proceedings “ of a Taxable person, the
Assistant Commissioner or Competent officer senior to him, who have regard to the nature and complexity of the case and the interest of revenue, might believe that the value has not been declared correctly or the Input Tax Credit availed is beyond the normal limitations. - In the Above cases, with the” Prior Approval of the Commissioner, The Assistant Commissioner or Any Officer Senior to him May direct the Taxable Person in FORM GST ADT-03 to get his records including books of account examined and audited by a specified chartered accountant or a cost accountant. The chartered accountant or a cost accountant will be nominated by the Commissioner.
- The Nominated Chartered Accountant or Cost Accountant has to file a Duly signed and Certified Audit report to the Assistant Commissioner within the period of ninety days.
- The Assistant Commissioner may extend the said period by a further period of ninety days on request made by the assessee or the chartered accountant or cost accountant or for any appropriate reason.
- The special Audit may be conducted even if the books of accounts of the taxable person have been Audited under any other provisions of the GST Act or any other law for this duration.
- The opportunity of being heard will be given to the assessee, in respect of any material gathered on the basis of special audit and which is proposed to be used in any proceedings against him under this Act or the rules under the law.
- All the expenses of the audit of records and examination, including the remuneration of appointed chartered accountant or cost accountant, is to be determined and paid by the Commissioner
- Information of conclusion of Special Audit shall be given to the Taxable person with the findings of the special audit in FORM GST ADT-04.
- The Process of Demand and Recovery may be initiated against the Taxable Person, if the special audit results in Traces of Tax Evasion or Short Payment or Wrong refunds, or Input Tax Credit wrongly availed or utilized.
Conclusion
Special Audit gives a Lawful and Legal Way for the GST Authorities to Determine Tax Liabilities in Complex Cases with the help of a Chartered Accountant or Cost Accountant. The expertise of the Professional Chartered Accountants or Cost Accountants always will be a boon in ensuring that the Revenue
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