GST Audit by Tax Authorities

Sec 65(1): Audit by Tax Authorities

The Commissioner or any officer authorized by him, by way of a general or a specific order, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed.

Sec 65(2): Place of Conduct of Audit

The officers referred to in sub-Section (1) may conduct audit at the place of business of the registered person and/or in their office.

Sec 65(3): Intimation

The registered person shall be informed, by way of a notice, not less than fifteen working days, prior to the conduct of audit in such manner as may be prescribed.

Intimation of audit is to be issued to the taxable person at least 15 days in advance in Form GST ADT-01

Sec 65(4): Period of Completion

The audit under sub-Section (1) shall be completed within a period of three months from the date of commencement of audit:

Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months.

Explanation.- For the purposes of this sub-Section, ‘commencement of audit’ shall mean the date on which the records and other documents, called for by the tax authorities, are made available by the registered person or the actual institution of audit at the place of business, whichever is later.

Such audit is to be completed within 3 months from the date of commencement of audit, which may be extended by the Commissioner, where required, by a further period not exceeding 6 months.

The Commissioner needs to record reasons in writing for grant of any such extension.

Sec 65(5): Obligation of Auditee

During the course of audit, the authorized officer may require the registered person:

(i) to afford him the necessary facility to verify the books of account or other documents as he may require,

(ii) to furnish such information as he may require and render assistance for timely completion of audit.

Sec 65(6): Audit Report

On conclusion of audit, the proper officer shall within thirty days, inform the registered person, whose records are audited, about the findings, his rights and obligations and the reasons for the findings.

On audit completion, information is required to be provided to the registered person including the findings during the audit in FORM GST ADT-02 within thirty days of conclusion of the audit.

Sec 65(7): Consequences

Where the audit conducted under sub-Section (1) results in detection of

• • tax not paid, or
  • such short paid, or
  • erroneously refunded, or
  • input tax credit wrongly availed or utilized,
  • the proper officer may initiate action under Section 73 or 74.

In cases where

• • tax liability is identified during the audit or
  • input tax credit wrongly availed or utilized by the auditee, the procedure laid down under Section 73 or 74 is to be followed. Audit cannot conclude automatically resulting in a demand. Independent application of mind is necessary for a valid demand to be raised.