Audit under GST



GST AUDIT

Introduction:

Audit under GST is the examination of records maintained by a registered dealer. The aim is to verify the correctness of information declared, taxes paid and to assess the compliance with GST. Audit under GST can be classified into following three categories:

1.      Audit by a Chartered Accountant or Cost Accountant

2.     Audit by the Department

3.     Special Audit

Audit by a Chartered Accountant or Cost Accountant:

As per Section 35(5) of the CGST Act, every registered person whose aggregate turnover during a financial year exceeds the prescribed limit of Rs. 2 Crore is liable to get his accounts audited by a Chartered Accountant or a Cost Accountant.

The registered person shall submit a copy of annual returns in Form GSTR-9/9A/9B, audited annual accounts, reconciliation statement under section 44(2) in Form GSTR- 9C and such other documents as may be prescribed.

In general, the procedure of GST Audit that can be followed by the auditor is as under:

·        Check the applicability of GST Audit for the concerned assessee.

·        Check the eligibility to be the GST Auditor

·        Understand the business (nature, scale, products and services, records to be maintained, etc.)  of assessee

·        Prepare Audit Program

·        Verification and reconciliation

Further, there should be some considerations to be taken by auditors are as follows:

·        Appointment should be obtained in writing.

·        Acceptance should be given in writing.

·        Communicate with the previous auditor under any indirect tax law (if any) so as to get better insight of auditee’s business. From next year communication with previous GST Auditor will become mandatory.

·        Any discrepancies found should be corrected while filing annual return by the assessee.

·        Reconciliation can be prepared only when audited annual accounts are available.

Audit by the Department

As per Section 65 of CGST Act, The commissioner or any officer authorized by him, by a general or specific order, may conduct audit of any registered person. Audit may be conducted at the place of business or in their office.

The proper officer shall issue a notice in FORM GST ADT-01 not less than 15 days prior to conduct of audit to the auditee. The proper officer authorised to conduct audit of the records and the books of account of the registered person shall, with the assistance of the team of officers and officials accompanying him.

The proper officer may inform the registered person of the
discrepancies noticed, if any, as observed in the audit and the said person may file his reply and the proper officer shall finalise the findings of the audit after due consideration of the reply furnished
. The audit should be completed within 3 months (Further extension of 6 months by commissioner may be available) from the date of commencement of audit.

 On conclusion of the audit, the proper officer shall inform the findings of audit to the registered person in FORM GST ADT-02 within 30 days.

Where the audit results in detection of tax not paid or short paid or erroneously refunded or ITC wrongly availed or utilised, the proper officer may initiate action under section 73 and 74 of CGST Act.

Special Audit

As per section 66 of CGST Act, At any stage of scrutiny, inquiry or investigation, assistant commissioner is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, with prior approval of commissioner, issue a direction to the registered person to get his accounts audited by a Chartered Accountant or Cost Accountant as nominated by commissioner.

 The officer shall issue a direction in FORM GST ADT-03 to the registered person to get his records audited by a chartered accountant or a cost accountant specified in the said direction. The audit should be completed within 90 days (Further extension of 90 days by assistant commissioner may be available for material and sufficient reason) from the date of commencement of audit.

 On conclusion of special audit, registered person shall be informed of the findings of the special audit in FORM GST ADT-04.

 Where the audit results in detection of tax not paid or short paid or erroneously refunded or ITC wrongly availed or utilised, the proper officer may initiate action under section 73 and 74 of CGST Act.