As per sub-section (13) of section 2 of CGST Act 2017, Audit means examination of records, returns and other documents maintained or furnished by the registered person under this Act 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 this Act or the rules made thereunder.
GST envisages three types of Audit. The first audit is by a chartered accountant or a cost accountant. Every registered person whose aggregate turnover during a financial year exceeds two crore rupees [as per rule 80(3) of CGST Rules 2017], has to get his accounts audited as specified under sub-section (5) of section 35 and furnish the copy of annual return filed under sub-section (1) of section 44, along with a copy of audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed duly certified, in FORM GSTR-9C.
In the second type, as per Section 65(1) of the CGST Act 2017 the Commissioner or any officer authorized by him can undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed, at the place of business of the registered person or in their office, and shall be informed, by way of a notice not less than fifteen working days prior to the conduct of audit in FORM GST ADT-01[as per rule 101(2) of CGST Rules 2017]. The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of the audit , which may be extended by further period not exceeding six months, if commissioner is satisfied that audit in respect of such registered persons cannot be completed within 3 months. On conclusion of audit, the registered person shall be informed by proper office, within thirty days in Form GST ADT-02[as per rule 101(5) of CGST Rules 2017], about the findings, his rights and obligations and the reasons for such findings.
The third type of audit is called the Special Audit. As per Section 66 (1) of the CGST Act 2017, the registered person can be directed by, any officer not below the rank of Assistant Commissioner, in Form GST ADT -03[as per rule 102(1) of CGST Rules 2017], 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. The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit in Form GST ADT-04 [as per rule 102(2) of CGST Rules 2017], duly signed and certified by him to the said Assistant Commissioner. The Assistant Commissioner may, on an application made to him in this behalf by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by a further period of ninety days. The expenses and remuneration such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final.
Where the audit conducted by tax authorities or special audit , results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized, the proper officer may initiate action under section 73 or section 74 of CGST Act 2017.