Audit Under GST - Authority and Scope / Timeframe for Audit Completion / Responsibilities During Audit
Section 65 of the GST law provides the framework for audits conducted by tax authorities. The Commissioner or an officer authorized by the Commissioner can audit any registered person. This authority can be exercised through either a general order, which applies to a group of people, or a specific order, which applies to an individual.
Audits can be conducted either at the business premises of the registered person or at the office of the tax authorities. To ensure transparency and preparedness, the registered person must be given a notice at least 15 working days before the audit begins. This notice period allows the registered person sufficient time to gather and organize the necessary documents and records.
The audit must be completed within three months from its commencement. However, if the Commissioner finds that the audit cannot be completed within this period due to its complexity or other reasons, the Commissioner can extend the audit period by an additional six months. This extension must be justified in writing, detailing the reasons why more time is needed.
The term "commencement of audit" is defined to ensure clarity. It refers to the date on which the requested records and documents are made available by the registered person or the date when the audit team physically starts the audit at the business premises, whichever is later. During the audit, the registered person is required to provide all necessary facilities and assistance to the audit officers. This includes granting access to books of account and other relevant documents and furnishing any information requested by the officers.
Once the audit is concluded, the audit officers are obliged to inform the registered person of their findings within 30 days. This communication includes the details of the audit findings, the registered person's rights and obligations arising from these findings, and the reasons behind the conclusions reached by the auditors. If the audit reveals that the registered person has not paid the correct amount of tax, has received an erroneous refund, or has wrongly availed or utilized input tax credit, the tax authorities can initiate action under Section 73 or 74 of the GST law.
Special Audit Under GST: Section 66 deals with special audits, which can be ordered at any stage of scrutiny, inquiry, investigation, or other proceedings if the case is complex or if there are significant revenue implications. An officer, not below the rank of Assistant Commissioner, can direct a special audit if they believe that the value has not been correctly declared or the credit availed is not within normal limits. However, this can only be done with the prior approval of the Commissioner.
The special audit is conducted by a chartered accountant or cost accountant nominated by the Commissioner. The nominated auditor must complete the audit and submit a signed and certified report within 90 days. If additional time is needed, the Assistant Commissioner can extend the audit period by another 90 days based on a request from the registered person or the auditor, or for any other substantial reason.
Even if the registered person's accounts have been audited under other provisions of the GST law or any other law, a special audit can still be ordered. This ensures that the special audit is independent of any previous audits, providing a thorough examination of the registered person’s records.
Before using any findings from the special audit in proceedings against the registered person, the tax authorities must provide the registered person with an opportunity to be heard. This ensures that the registered person can present their side of the case and respond to any adverse findings.
The expenses for the special audit, including the remuneration for the auditor, are determined and paid by the Commissioner. This determination of expenses is final, ensuring that the cost of the audit does not burden the registered person.
If the special audit reveals any unpaid or short-paid tax, erroneous refunds, or wrongly availed or utilized input tax credit, the tax authorities can initiate action under Section 73 or 74 of the GST law, similar to the actions following a regular audit.
Conclusion
Sections 65 and 66 of the GST law provide a comprehensive framework for auditing registered persons. These provisions ensure that audits are conducted in a transparent and fair manner, with clear guidelines on notification, timeframes, and responsibilities. By understanding these sections, registered persons can better prepare for audits and ensure compliance with the GST law, thus avoiding potential penalties and ensuring smooth business operations. The emphasis on fairness, accountability, and safeguarding revenue underscores the importance of these provisions in maintaining the integrity of the GST system.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
