Special Audit in GST
Detailed analysis of Special Audit in GST
GST is a trust based taxation regime wherein the assessee is required to self-assess his returns and
determine tax liability without any intervention by the tax official.Therefore a tax regime that relies on
self-assessment has to put in place a robust audit mechanism to measure and ensure compliance of the
provisions of law by the taxable person.
“Audit” has been defined in section 2(13) of the CGST Act, 2017 and it means the examination of records,
returns and other documents maintained or furnished by the registered person under the GST Acts or the
rules made there under or under any other law for the time being in force to verify the correctness of
turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance
with the provisions of the GST Acts or the rules made thereunder.
Types of Audit
GST envisages three types of Audit.
The first audit is by a chartered accountant or a cost accountant.
Every registered person whose aggregate turnover during a financial year exceeds two crore rupees has
to get his accounts audited by a chartered accountant or a cost accountant and furnish a copy of audited
annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C.
In the second type which is the normal audit, the Commissioner or any officer authorised by him, can
undertake audit of any registered person for such period, at such frequency and in such manner as may
The third type of audit is called the Special Audit. In Special Audit the registered person can be directed
to get his records including books of account examined and audited by a chartered accountant or a
cost accountant during any stage of scrutiny, inquiry, investigation or any other proceedings;depending
upon the complexity of the case.
- During the scrutiny, inquiry, investigation or any other proceedings of a registered person, the Assistant Commissioner or any officer senior to him, having regard to the nature and complexity of the case and the interest of revenue, might be of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits.
- In such cases, with the prior approval of the Commissioner, the Assistant Commissioner or any officer senior to him can direct the registered person in FORM GST ADT-03 to get his records including books of account examined and audited by a specified chartered accountant or a cost accountant. The chartered accountant or a cost accountant will be nominated by the Commissioner.
- The chartered accountant or cost accountant so nominated has to submit a report of such audit within the period of ninety days, duly signed and certified by him to the Assistant Commissioner.
- On an application made by the registered person or the chartered accountant or cost accountant or
for any material and sufficient reason, the Assistant Commissioner can extend the said period by a
further period of ninety days.
- The provisions of special audit shall have effect even if the accounts of the registered person have been
audited under any other provisions of the GST Act or any other law for the time being in force.
- The registered person shall be given an opportunity of being heard in respect of any material gathered
on the basis of special audit and which is proposed to be used in any proceedings against him under this
Act or the rules made thereunder..
- The expenses of the examination and audit of records, including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner.
- On conclusion of the special audit, the registered person shall be informed of the findings of the
special audit in FORM GST ADT-04.
- Where the special audit results in detection of tax not paid or short paid or erroneously refunded,
or input tax credit wrongly availed or utilised, the process of demand and recovery will be initiated
against the registered person.
Special audit provides a lawful and legal way for the GST officers to take the assistance of a chartered
accountant or cost accountant to determine tax liabilities in complex cases. The professional expertise
of a chartered accountant or cost accountant will be of great significance in ensuring that the interest of
revenue is safeguarded at all times.
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