Simplified GST Series-Audit/Section 65-66/CGST Act 2017

Section 65- Audit by tax authorities-

(1) 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.

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

(3) 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. 

Analysis As per Section 2(13) CGST ACT 2017“audit” means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made there under 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 there under.

1. Section 65 authorizes conduct of audit by the Commissioner or any other officer authorized by him of the transactions of the registered persons only.

2. The Commissioner may issue a general order or a specific order, to authorize officers to conduct such audit.

3. The audit will be conducted at the place of business of the registered person or office of tax authorities.

4. Intimation of audit is to be issued to the registered person at least 15 working days in advance in accordance with Rule 101(2) in Form GST ADT-01. 

Audit word on computer keyboard closeup

(4) 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.

(5) 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. 

(6) 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 such findings.

(7) Where the audit conducted under sub-Section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under Section 73 or 74. 

Analysis- The 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.

Commencement of Audit –

  • Date on which records and other documents called for by tax authorities are made available by Registered Person OR
  • Actual institution of audit at the place of business

WHICHEVER IS LATER

  • During the course of audit, the authorized officer may require the registered person to afford him the necessary facility to verify the books of account and also to furnish the required information and render assistance for timely completion of the audit.
  • On audit completion, information is required to be provided to the registered person including the findings during the audit as per section 65(6) read with Rule 101(5) in FORM GST ADT-02 within thirty days.
  • 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.

 Section 66- Special Audit 

(1) If at any stage of scrutiny, enquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the Commissioner, direct such registered person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner. 

(2) The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit duly signed and certified by him to the said Assistant Commissioner mentioning therein such other particulars as may be specified:

Provided that 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. 

Analysis-   1. Availing the services of the expert be it a Chartered Accountant or Cost Accountant is permitted by this section only when the officer (considering the nature & complexity of the business and in the interest of revenue) is of the opinion that:

_ Value has not been correctly declared; or

_ Credit availed is not within the normal limits.

2. An Assistant Commissioner after commencement and before completion of any scrutiny, enquiry, investigation or any other proceedings under the Act, may direct a registered person to get his books of accounts audited by an expert. Such direction is to be issued in accordance with the provision of Rule 102 (1) FORM GST ADT-03

3. The Assistant Commissioner needs to obtain prior permission of the Commissioner to issue such direction to the taxable person. 

4.The Chartered Accountant or the Cost Accountant so appointed shall submit the audit report, mentioning the specified particulars therein, within a period of 90 days, to the Assistant Commissioner in accordance with provision of Rule 102(2) FORM GST ADT-04. 

5. In the event of an application to the Assistant Commissioner by Chartered Accountant or the Cost Accountant or the registered person seeking an extension, or for any material or sufficient reason, the due date of submission of audit report may be extended by another 90 days . 

(3) The provision of sub-Section (1) shall have effect notwithstanding that the accounts of the registered person have been audited under any other provision of this Act or any other law for the time being in force.

(4) The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-Section (1) which is proposed to be used in any proceedings against him under this Act or the rules made there under. 

(5) The expenses of the examination and audit of records under sub-Section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final. 

(6) Where the special audit conducted under sub-Section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under Section 73 or 74. 

Analysis-  1. Section 66(3) states that special audit may be initiated notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force.

2. The registered person is to be provided an opportunity of being heard in respect of any material gathered in the special audit which is proposed to be used in any proceedings under this Act.

3. The remuneration to the expert is to be determined and paid by the Commissioner whose decision will be final.

 4. In case any possible tax liability is identified during the audit, procedure under section 73 or 74 as the case may be is to be followed.

Queries/doubts related to above mailed at mamta0581@gmail.com.

Contact No-9813458638 

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