SUB GST p3.2

AUDIT BY TAX AUTHORITIES [SECTION 65]

21 May 2020

Who may conduct the audit? 

The Commission For any officer authorized by him, by way of a general or a specific order, may undertake an audit of any registered person at the place of business of the registered person or in their office for a financial year. Where it is decided to undertake the audit of a registered person, the proper officer shall issue a notice not less than 15 working days prior to the conduct of the audit. 

What is meant by the commencement of the audit?

Commencement of audit is important because the audit has to be completed within a given specified period in reference to this date of commencement. Commencement of audit means the later of the following:

1. the date on which the records/accounts called for by the audit authorities are made available to them, or

2. the actual institution of audit at the place of business of the taxpayer.

The time limit for completion of the audit 

The audit is required to be completed within 3 months from the date of commencement of the audit. The period is extendable for a further period of a maximum of 6 months by the Commissioner. 

How to conduct an audit 

The proper officer authorized to conduct an audit of the records and books of account of the registered person shall, with the assistance of the team of officers and officials accompanying him, verify the documents based on which the books of account are maintained and the returns and statements furnished under the Act and the Rules made thereunder, the correctness of the turnover, exemptions, and deductions claimed, the rate of tax applied in respect of the supply of goods or services or both, the input tax credit availed and utilized, refund claimed, and other relevant issues and record the observations in his audit notes. During the audit, the authorized officer may require the registered person:

1. to facilitate the verification of accounts/records available or requisitioned by the authorities, 

2. to provide such information as the authorities may require for the conduct of the audit, and 

3. to render assistance for the timely completion of the audit. 

The proper officer may inform the registered person of the discrepancies noticed, as observations of the audit and the said person may file his reply and the proper officer shall finalize the audit after due consideration of the reply furnished.

Finalisation of Audit 

The proper officer shall finalize the findings of the audit after due consideration of the reply furnished by the registered person to audit observation brought to his notice during an audit. On the conclusion of an audit, the proper officer shall within 30 days inform the registered person, about the findings, his rights and obligations, and the reasons for such findings. Where the 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.