Handbook on GST Audit

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Description
Furnishing of information by the taxpayers through periodically filled returns is pivotal to the compliance mechanism in any taxation system but the verification of the correctness or otherwise of the furnished information by tax officers is the other side of the same coin. When the last edition had gone for print, the changes made vide the Finance Act, 2022 were yet to be notified, which have since already been notified, albeit the changes made vide the Finance Act, 2023 have also been notified by now. Certain amendments in sections 37 and 39, substitution of sections 38 and 41 and omission of sections 42, 43 and 43A vide Finance Act, 2022 (w.e.f. 01.10.2022) finally brought down the curtain on the initially proposed return system with GSTR-1, GSTR-2 and GSTR-3. Due to persistent technical glitches furnishing of GSTR-2 and GSTR-3 was deferred and a makeshift arrangement with GSTR-1 and GSTR-3B was made. This system of GST return filing was regularised retrospectively w.e.f. 01.07.2017 by amendment in the then rule 61(5) on 09.10.2019. On the same day GSTR-2A which was a system generated communication from the suppliers, was factored into the return filing system with insertion of sub-rule (4) in rule 36 of the CGST Rules. Now the recipient was restrained from availing ITC beyond a certain percentage of the ITC as per GSTR-2A in case some of his suppliers had not furnished GSTR-1 or uploaded details in IFF.
But w.e.f. 01.01.2022 a new auto-generated statement GSTR-2B has been factored in, in place of GSTR-2A, and now the registered person could avail ITC in a tax-period only in respect of those invoices/ debit notes etc. for which the suppliers have filed GSTR-1/ IFF upto the due date of furnishing of the same. To clarify the correct course of action in this situation, CBIC has already issued clarification vide circular No. 193/05/2023-GST dated 17.07.2023 in addition to instruction dated 26.05.2023. Therefore, utmost care is required be taken by the departmental officer during scrutiny or audit, lest some timeline is not followed properly.
Whereas various provisions of the CGST Act were amended vide the Finance Act, 2022, so as to extend the period of amendments in already furnished/ filed statements and returns upto 30th November following the end of the financial year to which the details pertain, but no time limitation was prescribed as to till when a statement/ return could be furnished/ filed. Therefore, vide the Finance Act, 2023, sections 37, 39, 44 and 52 have been amended so as to fix the maximum time limit within which a statement or a return can be furnished/ filed and the same has been fixed as three years from the due date of furnishing the said statement or return.
Interest payment provisions under sub-section (1) of section 50 were amended retrospectively w.e.f. 01.07.2017 by the Finance Act, 2021.
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Table of Contents
Chapter 1 Introduction
Chapter 2 Audits under Goods and Services Tax
Chapter 3 GST Audit Process and Procedure
Chapter 4 Understanding of Monthly, Quarterly & Annual Returns
Chapter 5 Special Audit
Chapter 6 Assessments under Goods and Services Tax
Chapter 7 Guidelines for GST Auditors
Chapter 8 Accounting and GST Audits
Chapter 9 Frequently Asked Questions (FAQs) for Auditors
APPENDICES
Appendix 1. Annexure I to Annexure XIV to GSTAM-2019
Appendix 2. Relevant Forms
Appendix 3. Relevant extracts relating to GST Audit in the GST Concept & Status as on 1st August, 2019
Appendix 4. Relevant extracts of FAQS on Audit from the 3rd Edition issued by CBIC on 15.12.2018
Appendix 5. E-flyer on Special Audit issued by CBIC dated 01.05.2019
Appendix 6. Accounting Terms
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Author Details
Anil Kumar Gupta, IRSB.Com, MBA, CMA author is a senior IRS Officer and Fellow Member of Institute of Cost Accountants of India, (ICMAI), having 33 years of experience in indirect tax administration including planning & conduct of Audits under GST, Central Excise, Service Tax & GST Law. The author had 4 years of first-hand experience of working in a Corporate Sector handling Finance & Accounts assignments before joining the IRS which gave him insight into the working of Internal Controls & Audit Systems usually adopted by a Company.
The Author is presently posted as Principal Director General - DGGI [Directorate General of GST Intelligence]. Prior to present posting, the author has worked as Pr. Chief Commissioner Kolkata CGST Zone and Chief Commissioner, Customs Zone Kolkata. The author has also worked as Pr. Additional Director General with National Academy of Customs & Indirect Taxes and Narcotics (NACIN) for 4 years which is the Apex Academy of Central Board of Indirect Taxes (CBIC) for imparting training on GST to Tax officers of both CBIC as well as States/UTs. The author has first-hand experience of implementation of GST Audit having worked as Commissioner (Audit), Panchkula.
Baljit Singh Khara, IRSMA, Ph.D. The author is a serving Government servant with more than thirty-four years' experience in Indirect Taxes & Customs. He has worked in various formations under Central Excise, Customs, Service Tax, CGST including Directorate of Revenue Intelligence (DRI) and NACIN. Having keen interest in learning and teaching, remained involved in various GST training programmes conducted by the department since 2016-17 and with NACIN Chandigarh as faculty since July 2017 for training the Central Tax as well as the State Tax Officers of various states/UTS.
He is a regular faculty with various NACIN campuses, other Government departments and educational Institutions. He has been actively involved in trade facilitation at Chandigarh after launch of GST.
Presently he is working as Assistant Director at the Zonal Campus, National Academy of Customs, Indirect Taxes and Narcotics (NACIN), Chandigarh. He has been actively involved in development and preparation of some topics including "Audit in GST" for iGOT Karmayogi Bharat portal. He has also authored two-volume book: A Comprehensive Handbook on GST: Legal Provisions, Procedures and Tax Rates, which has been very well
CS Sanjay Malhotra is a Fellow Member of Institute of Company Secretaries of India and is a Practicing Company Secretary for past 13 years with educational qualification in Masters of Business Administration (Finance), Chartered Financial Analyst, Cost and Management Accountants, Alumni of ISB (Indian School of Business), M.COM (Gold Medalist) and possess overall experience of 33 years with core expertise in the area of Indirect Taxation, Foreign Trade Policy Matters and Supply Chain Management. He is also the convener of Indirect tax Committee- FICCI Chandigarh, has written various articles on Indirect Taxes and is a regular faculty member to NACIN, ICSI, CII, Corporates, PSU's, State / Central Government in Indirect Tax Matters and have been involved at Central/State Government level for Indirect Tax policy formulation. Prior to this, Mr. Malhotra has worked with renowned Corporates for 20 years at President Level position having in-depth experience of Supply Chain, Financial Analytics, Accounting and this expertise has contributed in designing of Audit charter to ensure tax compliance across taxpayers at national level. Mr. Malhotra has to his credit various accolades by Governments, Tax associations and Taxpayers for his contribution in the field of Indirect Taxes.
 Anil Sharma B.com (Honrs), M.Com, FCMA The author is Practicing Cost & Management Consultant. He is having wide exposure to Project Accounting, System Audits, Costing, Valuation, Indirect Taxes, Statutory Audits under Company's Act, 2013 and Commercials. Before coming to practice in 2003, he served for more than fifteen years in large manufacturing organizations in both private and public sectors. Having in depth knowledge in day to day activities, he understands each business transactions and systems very well.
He has authored a book: GST - some perceptions and reflections. Author is a regular faculty to NACIN, ICMAI, Management Institutes, and Centre/States PSUs. Author is also panelist to various TV shows, AIR on GST and other contemporary issues. Tax Knowledge Foundation (TKF), New Delhi has conferred him with "TIOL-2021- Jury Award" for his contribution in the field of Taxation. Author is also Member to Indirect Tax Committee of
ICMAI-Kolkatta.