The conclusion of a GST departmental audit is marked by the issuance of the Final Audit Report in Form GST ADT-02 . The report contains the audit findings, and the taxpayer's response to these findings determines whether the audit proceeds to a demand notice or is closed.
This article explains what happens after the final audit report is issued and the scenarios for audit closure.
The Final Audit Report (ADT-02)
The audit officer finalizes the findings and issues the Final Audit Report in Form ADT-02 after considering the taxpayer's reply. The report is issued within 30 days of the conclusion of the audit.
Scenarios for Audit Closure
The audit can be closed in the following scenarios:
- No discrepancy: If the audit finds no discrepancy, the audit is closed.
- Explanation accepted: If the taxpayer's explanation is accepted, the audit is closed.
- Tax paid voluntarily: If the taxpayer pays the tax with interest voluntarily through DRC-03, the audit is closed.
- SCN issued: If the discrepancy is not resolved, a show cause notice is issued under Section 73 or 74.
Gauhati High Court Ruling on Reopening
The Gauhati High Court has held that once audit proceedings under Section 65 are closed, the same issues cannot be reopened under Section 73. The court ruled that reopening closed audit proceedings is not permissible.
Practical Steps After Audit Closure
- Obtain a copy of the closure communication from the department.
- Verify that the closure is recorded in writing.
- Retain all audit documents for the statutory period.
- Implement corrective measures for any observations.
- Monitor for any subsequent notices on the same issues.
Conclusion
Audit closure provides certainty to the taxpayer. Once the audit is closed, the same issues cannot be reopened. Taxpayers should ensure that they receive written closure communication and retain all records.
At Anuj Desai & Associates, we provide expert assistance in GST audit closure and post-audit compliance. Our team can help you navigate the closure process and protect your interests.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.