UNIT:4 GST

BY: SIMRAN JAIN

ASSISTANT PROFESSOR
GIBS
 GST Audit
Audit under GST involves examination of
records, returns and other documents
maintained by a GST registered person. It
also ensures correctness of turnover
declared, taxes paid, refund claimed, input
tax credit availed and assess other such
compliances under GST Act to be checked
by an authorized expert. 
GST is a trust-based taxation regime
wherein a taxpayer is required to self-
assess his tax liability, pay taxes and file
returns. Thus, to ensure whether the
taxpayer has correctly self -assessed his tax
liability a robust audit mechanism is a must.
Various measures are taken by the
government for proper implementation of
GST and audit is one amongst them.  
GST Audit Based on Turnover: This type
of audit is performed by the Cost
Accountant or the Chartered Accountant
appointed/hired by the taxpayer. According
to the CGST Act, this audit is conducted
when the turnover exceeds the limit of ₹ 2
crores, and the taxpayer needs to get audits
for their records and accounts.

Types of GST Audit in India

Normal/General GST Audit: 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.

Special GST Audit: 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. 
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 authorized 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.  
Onlya Chartered Accountant or a Cost Accountant can perform a
GST Audit u/s 35. 

Points to Note:
An internal auditor cannot parallelly be appointed as a GST Auditor.
The GST Act does not allow a GST practitioner to perform the audit.
The power to audit is granted only to a Chartered Accountant or
Cost Accountant who is in practice or is an employee of a firm of
Chartered Accountants or Cost Accountants. Therefore, a Chartered
Accountant must not be registered as a GST practitioner for the
purpose of issuing the Audit Report.

Where an organization or an entity has multiple branches registered

under GST in different states/UTs, the total aggregate turnover of
all such branches is considered while calculating the threshold limit
of Rs. 2 crores^. 

Qualification of GST Auditor & Eligibility 

The taxable person will be required
to:

provide the necessary facility to verify

the books of account/other documents
as required
to give information and assistance for
timely completion of the audit.

Obligations of the Auditee

On conclusion of an audit, the officer will
inform the taxable person within 30 days of:
the findings,
their reasons, and
the taxable person’s rights and obligations
If the audit results in the detection of
unpaid/short paid tax or wrong refund or
wrong input tax credit availed, then demand
and recovery actions will be initiated.

Findings of Audit
An offence is a breach of a law or rule, i.e.,
an illegal act. Similarly, an offence under
GST is a breach of the provisions of the GST
Act and Rules.

Offences Under GST

When has anyone committed an
offence under GST?
There are 21 offences under GST. For easy
understanding, these have been grouped
into heads as given below:

Fake or wrong invoices:

A taxable person supplies any
goods/services without any invoice or issues
a false invoice.
He issues any invoice or bill without supply
of goods/services in violation of the
provisions of GST
He issues invoices using the identification
number of another bonafide taxable person

Fraud:
He submits false information while
registering under GST
He submits fake financial
records/documents or files fake returns to
evade tax
Does not provide information/gives false
information during proceedings
Tax evasion:
He collects any GST but does not submit it
to the government within 3 months
Even if he collects any GST in contravention
of provisions, he still has to deposit it to the
government within 3 months. Failure to do
so will be an offence under GST.
He obtains a refund of any CGST/SGST by
fraud.
He takes and/or utilizes input tax credit
without actual receipt of goods and/or
services
He deliberately suppresses his sales to
evade tax
Supply/transport of goods:
He transports goods without proper
documents
Supplies/transports goods that he knows
will be confiscated
Destroys/tampers goods that have been
seized
Others:
He has not registered under GST although
he is required to by law
He does not deduct TDS or deducts less
amount where applicable.
He does not collect TCS or collects less
amount where applicable.
Being an Input Service Distributor, he takes
or distributes input tax credit in violation of
the rules
He obstructs the proper officer during his
duty (for example, he hinders the officer
during the audit by tax authorities)
He does not maintain all the books that he
required to maintain by law
He destroys any evidence
Forthe 21 offences above, for fraud cases,
penalty will be 100% (minimum Rs. 10,000)

For cases mentioned in 1, 2 under fake

invoicing and 4th under both tax evasion
and others heads, the penalty is equal to
the tax evaded or ITC availed or passed on.
The word “penalty” is not specifically defined
in GST and so it takes the meaning from
various judicial pronouncements
and principles of jurisprudence. A penalty is
a punishment imposed by law for
committing an offence or failing to do
something that was the duty of a party to
do. A penalty can be both corporal or
pecuniary, civil or criminal. Both corporal
(jail) and pecuniary (monetary) penalties
are applicable under GST.
Penalties under GST
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

Common Offences Under GST And Their Penalties

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 helping a person to

commit fraud: Penalty extending up to
Rs. 25,000
Penalty for opting for composition
scheme even though he is not
eligible: Demand & recovery
 provisions of sections 73 & 74 will
apply.
(i) Fraud case- Penalty 100% of the
tax due or Rs. 10,000 – whichever is
higher
(ii) Non-fraud case- Penalty 10% of
the tax due or Rs. 10,000 – whichever
is higher
Penalty for wrongfully charging GST
rate— charging a higher rate: Penalty
100% of the tax due or Rs. 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 invoicing: A

penalty of Rs. 25,000
Penalty for incorrect type of GST
charged (IGST instead of CGST/SGST):
No penalty. Pay the correct GST and get 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

Situations where there is no penalty

(but interest may apply)
Penalty for delay in payment of
invoice: ITC will be reversed if not
paid within 6 months. No penalty as
such

Penalty for wrongfully charging

GST rate— charging a lower rate:
Interest @18% applicable on the
shortfall
  GST Refund
GST refund is a process in which, registered
taxpayers can claim excess amount if they
paid more than the GST liability.

They can claim after submitting a refund

application with the necessary details in the 
GST portal.

What is GST Refund?

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.
The GST regime has provisions relating to
refunds, and it aims at streamlining and
standardizing the procedures about refunds
under GST. Therefore, a standardized form
has been created to make claims for
refunds. The procedure for making claims
can be completed online on time.
Activities or Transactions
which shall be treated
neither as a Supply of
Goods nor a Supply of
Services
1) Services by an employee to the employer
in the course of or in relation to his
employment.
2) Services by any court or Tribunal
established under any law for the time
being in force.
3)
(a) the functions performed by the Members
of Parliament, Members of State
Legislature, Members of Panchayats,
Members of Municipalities and Members of
other local authorities;
(b) the duties performed by any person who
holds any post in pursuance of the provisions
of the Constitution in that capacity; or

(c) the duties performed by any person as a

Chairperson or a Member or a Director in a
body established by the Central Government
or a State Government or local authority and
who is not deemed as an employee before
the commencement of this clause.

4)Services of funeral, burial, crematorium or

mortuary including transportation of the
deceased
5) Sale of land and, subject to clause
(b) of paragraph 5 of Schedule II, sale
of building.

6) Actionable claims, other than

lottery, betting and gambling.

7) Supply of goods from a place in the

non-taxable territory to another place
in the non-taxable territory without
such goods entering into India.
8)
(a) Supply of warehoused goods to any
person before clearance for home
consumption;

(b) Supply of goods by the consignee to any

other person, by endorsement of documents
of title to the goods, after the goods have
been dispatched from the port of origin
located outside India but before clearance
for home consumption.”
Goods and Services Tax (GST) is set to
overhaul the entire indirect tax regime in India
and make doing business easy in India. With
the implementation of GST, over one crore
registered enterprises will be registered under
GST as a taxable person and be required to
comply with various GST compliance
requirements. To make compliance easy for
businesses, the Government has introduced
various initiatives like GST Practitioners and 
GST Facilitation Centres. 

GST Practitioner
CGST Act contains the provisions regarding
appointment of GST Tax Practitioner (GSTP).
GSTP is a person who is authorized by the GST
Department for performing certain functions on
behalf of the registered persons under GST.
Although any person can perform GST functions
whether authorized or not. Such registration will
increase the sense of responsibility in person
performing functions on behalf of other and
increase confidence in the registered persons.

GST Practitioner
file GSTR 1 and GSTR 2
furnish GSTR 3 and GSTR 9
make a deposit for credit into the electronic
cash ledger
file a claim for refund (after confirmation from
the registered person
file an application for amendment or
cancellation of registration (after confirmation
from the registered person)
appear as an authorized representative

On the behalf of their clients, a GST

practitioner can do the following
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.
Validity of License
Following is the procedure for enrollment of GST
practitioner exams:
Register on GST portal as GST practitioner in form
PCT-01 and obtain enrollment certificate in form
PCT-02.
Upload necessary details for registration as ‘GST
Practitioner’ on the portal. GSTN will generate
Temporary reference number (TRN) and verify these
details through an OTP sent on the registered
mobile number. Upload supporting documents and
submit the application through DSC or EVC. An
acknowledgement with the GSTP Enrollment number
is received on registered email ID within fifteen
days.

How can one become a GST practitioner in India?

The examination for enrolment as GST
practitioner would be conducted by NACIN (The
National Academy of Customs and Indirect taxes
and Customs). https://nacen.gov.in/
The registration for this exam can be done on 
nacin.onlineregistrationform.org.
Candidates are required to login with the help of
GST enrolment number (user id) and PAN
(password).
The exams are conducted twice a year across
India at designated centre's. The candidate can
opt for the centre of his choice. The date of
exam is notified by NACIN and is available on
the GST portal and CBIC website.
Examination fees of INR 500 is payable by
the candidate at the time of enrollment.
It is a computer-based test consisting of
Multiple-Choice Questions only.
NACIN shall declare the result within one
month of the conduct of examination and
would be communicated to the candidate
by email/post.
In order to become GSTP, the person
must score minimum 50% of the total
marks.
Paper: ‘GST law and procedure’ would cover the
following legislation:
The Central Goods and Services Tax Act, 2017
◦ The Integrated Goods and Services Tax Act, 2017
 State-specific Goods and Services Tax Acts of 2017
 The Union Territory Goods and Services Tax Act, 2017
 The Goods and Services Tax (Compensation to States)
Act, 2017
 The Central Goods and Services Tax Rules, 2017
 The Integrated Goods and Services Tax Rules, 2017
 All-State Goods and Services Tax Rules, 2017
 Notifications, Circulars and orders issued from time to
time typically up to two months before the date of the
exam. NACIN may issue guidelines in this regard. 

Examination syllabus:
File an application for fresh registration
File an application for amendment or
cancellation of registration
Furnish details of outward and inward
supplies
Furnish monthly, quarterly, annual or final
GST returns
Make payments for credit into the electronic
cash ledger, i.e. payments for tax, interest,
penalty, fees or any other amount
File a claim for refund

Functions performed by GSTP

Represent the taxable person in any
proceeding under the Act, other than
inspection, search, seizure and arrest
File an appeal to the First Appellate
Authority
File an appeal to the Appellate Tribunal
(can only be done by a
CA/CS/ICWA/Advocate)