INTRODUCTION TO GST AUDIT
GST is implemented on Self- Assessment mode of payment model in such case, GST audit plays an essential and pivotal tool in the hands of the government to maintain a check on the fraudulent transactions. This also helps the GST department to examine vouchers, invoices, books of accounts and to determine whether correct GST is being paid by the taxpayer, to verify whether benefits taken are legitimate and no erroneous refund is claimed.
GST Audit is the process of examination of vouchers, returns, records, and other documents expected to be maintained by a taxable person under the various provision of GST law. GST Audit has the following purposes
- To verify the correctness of Turnover declared,
- To ensure there is no underpayment of GST,
- To check Refund claimed as per law,
- To assess Input Tax Credit (ITC) is not wrongly availed, and
- To make sure the Taxpayer has complied with the provisions of GST.
LEGAL PROVISIONS OF GST AUDIT BY THE DEPARTMENT (Section 65 OF CGST ACT, 2017)
- The Commissioner of CGST/SGST or any officer authorized by him is authorized to conduct an audit of a taxpayer under GST laws.
- The Auditee is required to receive a Notice in Form GST ADT-01 at least 15 days before the audit is conducted.
- The notice contains the Period of audit (duration for which audit would be conducted e.g. 1st April 21 to 30th June 21), Date of the visit by officers, Documents required for initial review etc.
- The information regarding the designated person / authorized person for coordination with the GST department needs to be given to the department on behalf of the registered person.
TIME LIMIT FOR COMPLETION OF AUDIT
- The audit shall be completed within 3 months from the date of its commencement of the audit.
- Audit is considered to be commenced as and when the information required by the GST department is being submitted for audit by the taxpayer.
- The Commissioner has the authority to extend the audit period for a further six months with reasons to be recorded in writing.
VERIFICATION OF BOOKS OF ACCOUNTS, RECORDS, AND DOCUMENTS
- The Authorized Officer shall conduct an audit of the books of account, records and verify the documents based on which the books of account are maintained, carry out reconciliation with the filed returns, verify turnover, exemptions, deductions claimed, tax invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, tax rates, ITC availed, refund claimed and other relevant issues.
- The Authorized officer might check the stock register reflecting opening balance, purchases, receipts of supply, and the closing balance. Records of goods lost, stolen, destroyed, etc. In cases where the taxpayer is engaged in Production then the officer might ask for records including break up of raw materials, finished goods, scrap, etc.
- The Authorized officer can also as for documents such as Job Work Register, E-way bill details, Names and complete addresses of the Suppliers and Customers, Detail of Advances received, paid, etc.
- In case of electronic records, log of all entries modified or deleted, any other relevant information as required by the law.
CONCLUSION OF GST AUDIT
As the GST audit is completed by the Commissioner of CGST/SGST or Authorized Officer after verification of the books of account/other documents, etc. The Auditor based upon information provided by the Taxpayer and his independent findings would arise based upon his observation.
The Authorized Officer may inform the record of the observations in his audit notes, discrepancies noticed, if any, and require the registered person to file his reply on the same.
After considering the reply, the Authorized Officer shall inform about his final observations, findings along with his reasons to the Auditee in Form GST ADT-02 within 30 days from the conclusion of the audit.
In cases of non-payment/ short payment of taxes; or erroneous refund claim; wrong availment or wrong utilization of the ITC or any other non-compliance, a separate show-cause notice needs to be issued to the Taxpayer under section 73 or 74 of the CGST Act for recovery of dues. It is important to understand that no amount could be recovered on the basis of audit report and separate proceedings under section 73 or 74 needs to be initiated for the same.
We at PGA & Co, helps our clients to effectively complete the GST audit conducted by the GST authorities through proper replies to the queries, document management, pre-scrutiny of data and providing on ground audit support during the audit period.