The tax authorities can issue the directions to audit the books of account of a registered person to check the correctness of turnover of business, rate of tax applied, input tax credit claimed etc. Within 30 days of conclusion of audit, the proper officer shall inform the registered person about his findings and the reasons thereof.
Who can issue order for audit?
The audit can be directed by the Commissioner or any officer authorized by him, by way of a general or a specific order mentioning the period (a complete financial year or part thereof) for which audit is required and the frequency. The tax authorities may conduct audit at the place of business of the registered person or in his office.
Time limit for audit
The registered person shall be informed, by way of a notice issued in Form GST ADT-01, not less than 15 working days prior to the conduct of audit. The audit shall be completed within a period of 3 months from the date of commencement of audit. The time limit can be extended further by a period of 6 months by the Commissioner for the reasons to be recorded in writing.
‘Commencement of audit’ shall mean the date on which 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.
Procedure during audit
During the course of audit, the authorised officer may require the taxable person to afford and support him with necessary facilities to verify the books of account or other documents for timely completion of the audit.
The authorized officer shall verify the documents, on the basis of which books of account have been maintained, returns and statements submitted to check the correctness of following:
1. Turnover of business
2. Exemptions and deductions claimed
3. Rate of tax applied in respect of supply of goods or services
4. The input tax credit availed and utilized
5. Refund claimed
The officer so authorized shall record in writing all the findings and other observations which he comes across and may choose to inform the registered person of the discrepancies noticed and the said person may file his reply on the basis of which the officer shall finalise findings of the audit after due consideration of the reply furnished by the registered person.
Documents that may be demanded during Audit
As per GST Law Every registered person should keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of—
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed
Where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business. These Records may even be maintained in electronic form.
Other General Documents that may be demanded / reviewed
(a) GST Monthly , Quarterly Returns
(b) GST Annual Return , GST Reconcilliation Statement and GST Audit Report
(c) E-Way Bill Copies , HSN Wise Product Summary , Other Various Records / Registers prescribed to be maintained by GST Tax Payers
(d) Audited Financial Statements along with Directors Report , Auditors Report , CARO Report , Tax Audit Report – 3CD
(e) Documents in Relation to Constitution of Entity – Partnership Deed , Memorandum & Articles of Association , Promoter Details etc
Furnishing of report
After completion of audit, the authorized officer (Deputy Commissioner or Assistant Commissioner) shall inform the registered person within 30 days about his findings, his rights and obligations and the reasons for the findings. Such information shall be furnished in Form GST ADT-02.
Initiation of recovery proceedings
Where as a result of such audit, the authorized officer finds that the taxes were not paid or have been short paid or erroneously refunded, or input tax credit erroneously availed or utilised, then he may initiate the action for recovery of taxes from such registered person.
Concluding Summary
Audit by the department is a new concept for the VAT migrated Taxpayers . But the Concept existed in Excise & Service Tax Law before. It is of utmost important to compile all your data as needed as soon as you receive notice in Form ADT-01 which would state the date when department would commence the audit.