Departmental audit under GST begins; first set of notices sent to assessees

Shishir Sinha New Delhi | Updated on January 08, 2020 Published on January 08, 2020

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For the first time Goods & Services Tax (GST) authorities have started sending notices for audit of assessees to ensure correctness of tax paid and credit claimed.

The notices have been sent for the first year of GST — 2017-18. There are three types of audit under the GST regime. The first is turnover based audit where a taxpayer is needed to get his/her accounted audited by a Chartered Accountant or Cost Accountant and submit the report as part of GSTR 9C returns form, if his/her annual turnover is ₹2 crore or more. The second is a special audit where a Chartered Accountant or Cost Accountant, nominated by the Commissioner, does the audit on the order of Deputy/Assistant Commissioner, if there is apprehension of wrong declarations at big level.

The third category is the general audit where authorities undertake audit of any taxpayer. According to Rajat Mohan, Senior Partner with AMRG & Associates, the era of departmental audits has begun. Authorities would summon taxpayers to produce detailed documents justifying correctness of the output taxes and claim of the input tax credit. “This being the first audit in the GST regime, tax officers are expected to take little extra time reconciling financial information from various sources including financial statements, directors’ reports, GST filings, income tax filings, tax audit report, cost audit report, internal audit report, agreements, purchase orders and many more,” he said.

Audit time-frame

Such general audit is undertaken under Section 65 of the GST Act. It will be implemented by a group of GST officials either at the Tax Department office or at the place of businesses. Assessees will get notice at least 15 days before such an exercise is undertaken. The audit will be completed within a period of three months from the date of commencement of the audit which can be extended by a further period, not exceeding six months. During the course of audit, the authorised officer may require the registered person to afford him the necessary facility to verify the books of account or other documents as he may require and to furnish such information and render assistance for timely completion of the audit. On conclusion of audit, the proper officer will, within 30 days, inform the registered person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings. In case of detection of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised, action will be initiated.

When an assessee gets notice for such an audit, he should get ready following self-attested documents and records for the said financial year — return forms (GSTR1, GSTR 2A, GSTR 3B, GSTR9 and GSTR 9C), GST registration certificates, copies of annual report along with directors/individual audit reports and trial balances for the audit period, Income Tax Returns, any returns submitted to banks/ financial institutions, cost audit, tax audit & internal audit reports, electronic credit/cash ledger, abstract of output services invoices & input services, work order/purchase order/agreements, filed up forms as prescribed by GST Audit manual and copy of last general audit report.

Published on January 08, 2020

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