[Sections 35(5), 65, 66 and 44 of the CGST Act, 2017 read with Rule 80, 101 and 102 of the CGST Rules, 2017]
Introduction
Audit under GST is the examination of records maintained by the taxable person to verify the correctness of information declared, taxes paid by him under the provisions of the Act. GST Act envisages three types of audits – Mandatory Audit (if turnover exceeds the threshold limit), Special Audit (if complexities are involved in the calculations), and Audit by the tax authorities.
GST Audit
GST is a trust based taxation regime wherein the assessee is required to self-assess his tax liability without any intervention of tax officials. A tax regime that relies on self-assessment generally puts in place a robust audit mechanism to ensure compliance of provisions of law by the taxable person.
Audit means 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 the compliance with the provisions of this Act or rules made there under. GST Act envisages three types of audits, which are discussed below.
Mandatory Audit
Every registered person whose aggregate turnover from supply of goods or services during a financial year exceeds Rs. 2 crores has to get his accounts audited by a Chartered Accountant or a Cost Accountant and furnish a copy of audited annual accounts along with a reconciliation statement.
1Also, it has been made optional for all those registered persons, whose aggregate turnover in a financial year doesn’t exceed Rs. 2 crores and who have not furnished their annual return before the due date, for the financial year 2017-18 and 2018-19. It shall be deemed that such returned has been furnished on the due date, if it has not been furnished before the due date.
Special Audit
If at any stage of scrutiny, inquiry, investigation or any other proceedings, any officer (not below the rank of Assistant Commissioner), having regard to nature and complexity of the case and in the interest of revenue, is of the opinion that the value of supply has not been correctly declared or credit availed is not properly accounted, he may issue directions for special audit after taking the previous approval of Commissioner.
The special audit can be done by a Chartered Accountant or a Cost Accountant as may be nominated by the Commissioner.
Audit by Tax Authorities
The Commissioner, by way of a general or specific order, may undertake audit of any registered person. The manner in which audit is required to be conducted along with the audit frequency shall be decided by him. For such purpose he shall issue a notice to the registered person at least 15 days before the commencement of audit and it would be completed within the period of 3 months from the date of commencement. If required, the period of audit may be extended for a further period of 6 months and he shall record in writing the reasons for such extension.
Annual Return
Who has to file Annual Return?
Every registered person, other than following, shall electronically furnish an annual return on the common portal for every financial year:
1.An Input Service Distributor (ISD)
2.A person required to collect TCS
3.A person required to deduct TDS
4.A casual taxable person
5.A non-resident taxable person
6.A supplier supplying online information and data base access or retrieval services (OIDAR) from a place outside India to a person in India, other than a registered person2.
Annual return is required to be furnished by every registered persons irrespective of the fact that his GST registration has been cancelled.
An exception: Only those registered persons have been exempted from filing annual return, whose aggregate turnover does not exceed Rs. 2 crores and who have not furnished their annual return before the due date, for financial year 2017-18 and 2018-19. In such case it shall be deemed that such return has been furnished on the due date, if it has not been filed.
Forms for filing of Annual Return
A taxpayer shall file the annual return in the form prescribed below:
1.Form GSTR-9A, if supplier is a composition taxpayer
2.Form GSTR-9B, if supplier is an e-commerce operator required to collect TCS.
3.Form GSTR-9, in any other case.
Consequences of default
Where a taxpayer fails to file his annual return by the due date, he shall be liable for payment of late fees of Rs. 200 (Rs. 100 under CGST Act and Rs. 100 under SGST Act) for every day during which such failure continues. However, the amount of late fees shall not exceed 0.50% of his turnover in the particular State or Union Territory.
General Penalty
Where any specific penalty is not mentioned then a general penalty of Rs. 50,000 shall apply.
1. Vide Notification No. 47/2019 – Central Tax, Dated October 9, 2019.
2. Vide Notification No. 30/2019- Central Tax, dated June 28, 2019.
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