Professional Documents
Culture Documents
Unit 4
Unit 4
Audit under GST is the process of examination of records, returns and other documents
maintained by a taxable person. The purpose is 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 GST.
As per the CGST Act, Section 35 (5), the registered taxpayers of India whose aggregate
turnover is over ₹ 2 crores in a financial year (FY) to get their accounts book audited by an
authorised Cost Accountant or a Chartered Accountant. The taxpayer registered under GST
must submit a copy of the GST audit report, financial statements, and reconciliation
statement through Form GSTR 9C. The concerned taxpayer must submit the reports to the tax
department once in a financial year.
It shall be noted that the GST auditing is carried out state-wise. This is the reason why a
separate GST audit is done for each unique registrations under the same Permanent Account
Number (PAN).
OBJECTIVES OF GST AUDIT
1. Examination of records, return and other documents. These records, returns and
documents might have been maintained or furnished under GST law or any other law.
2. To verify the correctness of :-
a) Turnover declared
b) Taxes paid
c) Refund claimed
d) Input tax credit availed
3. To assess auditee’s compliance with the provisions of GST Act and Rules.
Aggregate Turnover = Value of the taxable supplies (intrastate and interstate) + Goods
and Services export supplies + Exempt supplies
2. Normal/General GST Audit (Section 65 Audit by Tax Authorities): This GST audit is
conducted by the CGST/SGST Commissioner or any other officer accredited by them. It
is conducted on Commissioner’s order with 15 days prior notice to the taxpayer.
3. Special GST Audit (Section 66 Audit by Tax Authorities): This audit is conducted by a
Cost Accountant or a Chartered Accountant accredited by the Commissioner. It is
conducted on the order of the Assistant or Deputy Commissioner with the prior approval
of the Commissioner.
There are a few documents that the taxpayer has to furnish in front of the auditee for the GST
audit. These documents are as follows:-
● Sales Register
● Stocks Register
● Purchase Register
● Expenses Register
● Audit under GST-period generated e-bills and their compliance with the rules.
The last date for the GST Audit limit and submission is 31st December of the preceding
financial year. Through the CBIC notice, the due date can be extended for the registered
taxpayers.
As of now, there is no specific provision for the GST Audit report. However, as a penalty, an
amount of ₹ 25,000 needs to be paid to the authority. However, the penalty does not apply to
the taxpayers whose annual turnover is less than the limit of ₹ 5 crores and whose GST return
filing has been waived off in the Form GSTR 9C in FY 2018-19.
TYPE FORM
Regular taxpayer of India who is filing GSTR 1 as well as GSTR 3B Form GSTR-9
Usually when the GST paid is more than the GST liability a situation of claiming GST refund
arises. GST refund is a process in which, registered taxpayers can claim excess amount if
they paid more than the GST liability. GST refund applies to any taxpayer upon making extra
GST payment in the form of tax, interest, penalty, fees or any others.
The cash flow and working capital requirements of manufacturers and exporters could be
adversely affected if a refund is delayed. As a result, one of the intentions of the
implementation of GST is to ensure that the refund process is smoother so that manufacturers
and exporters do not face issues due to delays. By ensuring that the refund process is
facilitated quickly, tax administration becomes more effective.
Under GST the process of claiming a refund is standardized to avoid confusion. The process
is online and time limits have also been set for the same. For the refund process, the taxpayer
shall apply through FORM GST RFD-01, as prescribed.
As per Sec 54(1), a person claiming refund of tax or interest or any other amount paid must
file an application for refund in Form GST RFD-1 before the expiry of 2 years from the
'relevant date’. The ‘relevant date’ in each scenario of refund is given below:
● Goods exported by sea or air – Date on which the ship or aircraft in which the goods
are loaded, leaves India
● Goods exported by land – Date on which the goods pass the frontier
● Goods exported by post – Date of dispatch of goods by the concerned post office
● Services exported, where the supply of service has been completed prior to the
receipt of payment – Date of receipt of payment
● Services exported, where the payment has been received in advance, prior to the
date of issue of invoice – Date of issue of invoice
● Unutilized input tax credit – End of the financial year in which the claim for tax
refund arises
● Tax paid on inward supply of goods and/or services which have been exported or
on inputs or input services used in goods and/or services exported. Please note,
that if the goods are subjected to export duty, the refund will not be allowed.
● Unutilized input tax credit due to output supplies being exports or zero rated
supplies
● Unutilized input tax credit due to inverted duty structure. This is when the rate of
tax on inputs is higher than the rate of tax on output supplies. Please note, that in this
case, the refund is not applicable when supplies are NIL rated or fully exempt.
As per Section 54 of the GST Act, any of the following situations may necessitate a GST
refund application to be filed by the taxpayer:
● Visit the GSTN portal and fill in the application form meant for claiming refund.
● You will receive an email or SMS which contains an acknowledgment number after
the filing of application is done electronically.
● The cash and return ledger will be adjusted and the "carry-forward input tax credit"
will be reduced automatically.
● The application for refund along with the documents you have submitted will be
scrutinised by the authorities with a 30-day period after you have filed the refund
application.
● "Unjust enrichment" is a concept that will be thoroughly scrutinised by the
authorities. In case the application qualifies, the refund will be transferred to a
Consumer Welfare Fund (CWF).
● In case the refund claimed by the individual in excess of the predetermined amount of
refund, a pre-audit process will be conducted before the refund is sanctioned.
● The credit of the refund will be done electronically to the applicant's account through
NEFT, RTGS or ECS.
● Individuals are allowed to make their applications for refund at the end of each
quarter.
● In case the amount of refund is below Rs.1000, no refund will be provided to the
individual.
GST laws have standardised procedure for processing a GST refund claim across India. The
taxpayer must file all GST refund applications online in a standardised form on the GST
Common Portal. The person shall also file returns on a monthly basis for claiming refund
amount in the credit balance. On filing a refund application, an acknowledgement for refund
application would be provided within 14 days of the refund application is acceptable.
On receiving the refund request, the concerned Officer would have to convey the status of the
application within 14 days. If there are any deficiencies in the application, the GST refund
request would be sent back to the applicant along with the list of deficiencies and the
applicant can refile the application. If there are no errors or deficiencies, the GST refund
claims, if in the order must be sanctioned within a period of 60 days from the date of receipt
of the claim. Officers are also not allowed to issue deficiencies memo after the 14 day period
during when there are required to process the GST refund application.
Interest Payable on Delayed refunds
As per Sec54(5), If the amount is not refunded to the applicant within 60 days from receipt of
application, the applicant is entitled to receive the interest @ 6% along with the refund
amount from the date immediately after the expiry of 60 days till the date of payment of GST
refund. If the claim of refund arises from an order passed by an adjudicating authority or
Appellate Authority or court, the applicant is entitled to receive the interest @ 9% along with
the refund amount from the date immediately after the expiry of 60 days till the date of
payment of GST refund.
Any taxpayer can claim a refund of any tax, interest, penalty, fees or any other amount paid
by him by filing an application electronically in FORM GST RFD-01 through the GST
Common Portal or through a GST Facilitation Centre. However, if a refund relates to balance
in the electronic cash ledger, the taxpayer can claim the GST refund upon furnishing the
returns for the relevant tax period in FORM GSTR-3, FORM GSTR-4 or FORM GSTR-7.
Documents Required
Statement of Relevant Invoices
For claiming GST refund, the applicant must maintain and file proper documentation. Along
with all GST refund request, a statement of relevant invoices pertaining to the claim must be
filed. As per the GST rules, the taxpayer shall maintain the invoice filed by the taxpayer for a
minimum period of 7 years.
There are two types of breaches prescribed under the GST law: minor breaches and major
breaches:
● Minor Breaches: These are the breaches in which the tax amount involved is less
than ₹5,000. These breaches include minor mistakes in filing returns such as
documentation errors and omissions. In most cases, no penalty shall be imposed for
such breaches.
● Major Breaches: These breaches involve a tax amount of ₹5,000 or above. In case
of such breaches, a penalty shall be imposed on the taxpayer - either monetary or
corporal punishment (jail term), depending upon the amount of tax involved.
There are 21 offences under GST. For easy understanding, these have been grouped
into heads as given below:
1. Wrong Invoicing
● Supply of goods/services by a taxable individual without an invoice or with a false
invoice.
● Issuance of the invoice without the supply of the goods/services.
● Using the invoice identification number of someone else.
2. Fraud
● Submission of wrong information at the time of GST registration.
● Submission of wrong financial records with an intent to evade the applicable tax.
● Not providing the required information or giving wrong information during the
proceedings.
3. Tax Evasion
● Collecting GST but not submitting the same to the government within a period of
3 months.
● Not collecting the GST in line with the provisions laid down by the law and not
submitting the same to the government.
● Obtaining CGST/SGST refund by committing fraud.
● Utilising input tax credit without actually receiving the goods/services.
● Deliberate suppression of sales with an intent to evade the tax.
4. Transport/Supply of Goods
● Transport of goods without proper documentation.
● Transport of goods that can be seized.
● Destroying/tampering with goods which have been seized.
5. Others
● Not registering under GST despite being required by the law.
● Not deducting TDS or deducting less TDS whenever required.
● Not deducting TCS or deducting less TCS whenever required.
● Taking or distributing the input tax credit in violation of the law.
● Obstructing the authorised GST officer when they are performing their duty.
● Not maintaining all the required books as mandated by the law.
● Destroying any evidence.
Penalty for delay in filing GSTR The late fee is Rs. 100 per day per Act. So
it is 100 under CGST & 100 under SGST.
Total will be Rs. 200/day. The maximum is
Rs. 5,000. There is no late fee on IGST.
Penalty for not filing GSTR Penalty 10% of the tax due or Rs. 10,000 –
whichever is higher
Penalty for committing a fraud Penalty 100% of the tax due or Rs. 10,000
– whichever is higher (High-value fraud
cases also have jail term)
Penalty for wrongfully charging GST Penalty 100% of the tax due or Rs.
rate— charging a higher rate 10,000 -whichever is higher (if the
additional GST collected is not submitted
with the govt)
Penalty for not issuing an invoice Penalty 100% of the tax due or Rs. 10,000
– whichever is higher
Penalty for not registering under GST Penalty 100% of the tax due or Rs. 10,000
– whichever is higher
Penalty for incorrect type of GST No penalty. Pay the correct GST and get
charged (IGST instead of CGST/SGST) a refund of the wrong type of GST paid
earlier
Penalty for incorrect filing of GST return No penalty. But interest @18% on
shortfall amount
Penalty for delay in payment of invoice. ITC will be reversed if not paid within 6
months. No penalty as such
Jail punishments
GST also has corporal punishments (jail) for high-value fraud cases. In case of fraud
exceeding ₹100 Lakhs, the offender might also have to serve a jail term apart from the
applicable fine.
1. Minor breaches (where tax amount is less than Rs.5000) or errors are easily
rectifiable and clearly made without any motive of fraud.
2. There will not be substantial penalties for minor breaches
3. The tax authority may issue a warning in such cases.
This will be beneficial to businesses, especially SMEs, who may make genuine
mistakes especially in the first few months of GST implementation. Being penalized
for genuine errors will be a hard blow to the SMEs who do not have as many
resources as the larger organizations to adapt to GST.
Rule 24 of the Return rules, provides the eligibility conditions to get enrolled as GST
Practitioner for any person who
(i) Is a citizen of India;
(ii) Is a person of sound mind;
(iii)Is not adjudged as insolvent;
(iv)Has not been convicted by a competent court for an offence with imprisonment not less
than two years.
In addition, the person should also satisfy any of the following conditions: -
Validity of License
● The license for GST practitioner would valid until its cancelled by the relevant
authority.
● A person holding the license shall pass the examination which the GST authority
holds and the commissioner shall notify it time to time.
● Thereafter, people who want to become GST practitioner through the sales tax
practitioner or tax return preparer route are required to:
○ pass an exam conducted by the GST Authority and
○ complete it within one year from the implementation of GST.