Section 66 of the CGST Act empowers the Assistant or Deputy Commissioner to direct a registered person to get their accounts audited by a Chartered Accountant or Cost Accountant nominated by the Commissioner. This is known as a special audit and is ordered when the officer believes that the taxpayer has not correctly declared tax liability or ITC.
This article explains the special audit process, the role of the nominated auditor, and the taxpayer's rights.
When Is a Special Audit Ordered?
A special audit can be ordered at any stage of scrutiny, inquiry, investigation, or any other proceedings. The officer must be of the opinion that the taxpayer has:
- Not correctly declared the value of goods or services.
- Availed excess ITC.
- Not paid the correct tax.
- Complex accounts that require professional examination.
Appointment of the Auditor
The auditor is a Chartered Accountant or Cost Accountant nominated by the Commissioner. The taxpayer does not choose the auditor. The auditor must be given access to the taxpayer's books of accounts and records.
The 90-Day Timeline
The special audit must be completed within 90 days from the date of the direction. The officer can extend this by a further 90 days with recorded reasons.
The Audit Report
The auditor submits the report to the officer, who then provides a copy to the taxpayer. The taxpayer is given an opportunity to be heard before any demand is raised based on the audit findings.
Taxpayer Rights During Special Audit
- Right to a copy of the audit report: The taxpayer is entitled to a copy of the report.
- Right to be heard: The taxpayer has the right to respond to the audit findings.
- Right to representation: The taxpayer can be represented by a professional.
- Right to challenge the auditor's appointment: If the appointment is mala fide, it can be challenged.
Conclusion
A special audit under Section 66 is a serious matter that requires prompt and professional response. Taxpayers must cooperate with the auditor while protecting their rights. The audit report can form the basis for a demand notice, so the response to the report is critical.
At Anuj Desai & Associates, we provide expert assistance in responding to special audits under Section 66. Our team can help you navigate the process and respond effectively.
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.