A departmental audit under Section 65 of the CGST Act is a statutory examination of a registered person's records, returns, and compliance. It is conducted by GST officers and can cover any registered taxpayer, regardless of turnover. Understanding the audit process and the taxpayer's rights is essential.
This article explains the Section 65 audit process, scope, and timeline.
The Audit Process
The departmental audit follows a structured process:
- Phase 1: Selection and Notice: The taxpayer is selected for audit and issued Form GST ADT-01 at least 15 working days before the audit commences.
- Phase 2: Desk Review: The audit officer reviews the returns, records, and other documents submitted by the taxpayer.
- Phase 3: Field Examination: The officer visits the taxpayer's premises to examine books of accounts, invoices, and other records.
- Phase 4: Communication of Findings: Discrepancies and findings are communicated to the taxpayer in Form GST ADT-02 .
The 3+6 Month Timeline
Section 65(4) mandates that the audit must be completed within three months from the date of commencement. The Commissioner can extend this by a further six months with recorded reasons. The audit is deemed to have commenced on the date on which the notice in ADT-01 is served.
Scope of the Audit
The audit covers:
- Correctness of turnover declared.
- ITC claims and eligibility.
- Compliance with place of supply rules.
- Export of services and zero-rated supplies.
- Reverse charge mechanism compliance.
- E-way bill compliance.
- Reconciliation of GSTR-1, GSTR-3B, and GSTR-9.
Taxpayer Rights During Audit
- Right to 15 days' notice: The audit cannot commence before 15 working days from the service of ADT-01.
- Right to be heard: The taxpayer has the right to respond to audit findings.
- Right to representation: The taxpayer can be represented by a professional.
- Right to copies of documents: The taxpayer is entitled to copies of documents relied upon.
- Right to timely completion: The audit must be completed within the prescribed timeline.
Conclusion
The departmental audit under Section 65 is a comprehensive examination of GST compliance. Taxpayers should prepare thoroughly, maintain proper records, and cooperate with the audit while protecting their rights.
At Anuj Desai & Associates, we provide expert assistance in preparing for and responding to GST departmental audits. Our team can help you navigate the audit process and ensure compliance.
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.