After completing GST Audit for FY 2017-18, if you feel that the work is over than you have to change your feelings because “Picture abhi baki hai mere dost”. The New Chapter of Goods and Service Tax LAW i.e. Audit Notices begins….

Numbers of taxpayers have already got notice/letter from GST department in respect of conducting the GST Audit for the period July 2017 to March 2018 or till March 2019 even when annual returns are not filled. As soon as the lock down will end, notices will be again sent to the taxpayers.

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As per Section 65 of CGST Act 2017, proper officer may conduct an audit of any registered person by issuing the notice in advance not less than 15 working days prior to conduct an audit. The audit shall be completed by officer within 3 months from the date of commencement of audit. The period may be extended.

Now let us see first what GST Audit means: 

• Examination of records, returns and other relevant documents,  
• Verifying the turnover declared and taxes paid,
• Verifying Input tax credit claimed and
• check whether all the compliance of GST Law followed or not.

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Following Documents may be verified by the officer with the books of accounts:-

• Return forms like GST Form–3B, GSTR-1 and GSTR-4 etc. data with books e.g. liability declared, ITC calculation, invoice of doubtful supplier etc.
• Payment Challans
• Cash credit ledger for the relevant period
• Ledger of stock maintained  
• Financial Reports/ Statutory Reports.
• GST Registration details
• Refunds claimed related documents
• Purchase and Sale register
• Other documents which he may require

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The notice contains two enclosures:-

1. Annexure-A :- Documents which are to be submitted
2. Questionnaire :-  Questions to be filled

Let’s go in detail –

ANNEXURE- A

• Copies of Annual Reports (with all schedules and Notes to Accounts), Balance Sheet, Profit & Loss Account Statement for F.Y. 2017-18, Trial Balance for F.Y. 2017-18(from July 2017 to March 2018).
• Copies of GSTR 3B Returns along with tax payment proof and copies of GSTR 1 and 2, Annual Return GSTR 9 or 9A and other GST Returns which are applicable to the assessee from July 2017 to March 2018.
• A detailed note on the activities undertaken by you may be given. This note should comprehensively cover all aspects of activities including history of mergers/ acquisitions, etc.
• This note should also include the activities of the company/ Group of Companies (if any) in its entirety. A note explaining the various streams of revenue of the company may also be given.

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• Duly filled Questionnaire, in the proforma enclosed herewith. The same may be submitted on the letter head of the company duly signed by the authorised representative of the assessee.
• Reports in form 3-CEB, 3CB and 3CD returns submitted to Income Tax department covering the audit period F.Y. 2017-18. F.
  1. Service Tax Return for the period April 2017 to June 2017;
  2. GST TRAN-I Return filed for claiming Transitional Credit
  3. Electronic Credit Ledger of ITC and Electronic Cash Ledger for the period 01.07.2017 to 31.032018.
• Details of the various head of expenditures including the expenditures incurred in foreign currency from India; including the payments made to the Parent company towards Head Office Expenses as per the company policy for F.Y. 2017-18(from July 2017 to March 2018).

How to maintain books for proper filing of GST Returns?

• Copy of GST Registration certificates (original and amended also, if any).
• Soft copy of the sales ledger in respect of Goods and Services, Sales Reports, and Electronic Credit Ledger of ITC in Excel format for the period F.Y. 2017-18(July 2017 to March 2018) containing details namely, Input Service Category, Invoice no.,  date, name, address, GSTIN of Vendors, date of payment, Month in which the credit was taken (financial year wise).
• Copies of TDS statement in form 26AS and Income Tax Return.
• Details of earlier Central Excise! Service Tax Audit conducted if any. If so, please provide the copy/copies of Audit Reports.

Questionnaire

Following are various questionnaires for gathering information of business w.r.t. sale process, purchase process, debit note, credit note, transaction with subsidiary or associate company, invoice generating process, types of goods manufactured, supply to which states, wastage, input tax credit reversal, annual reports, audit reports, exempted supply, discounts given or received, valuation of services, organisation structure etc.

General-

• Name & address of the registered person.
• Name and contact number of the ‘Authorised person’ for Audit.
• GSTIN,
• Whether the taxable person Is a Proprietary, Partnership firm, Unlimited liability Partnership firm (LLP), Pvt. Ltd Company, Public Unlimited Company?
• Details of transactions with Associated Enterprise.
• Details of Exports, etc

Invoicing Pattern-

• Is invoice issued In respect of all transactions? If not, reasons for not issuing invoice.
• How many series of invoices are being used?
• Is Invoice issued on the date of supply of service or before or later? 08. Ust the different heads under which amounts are billed in invoices and their corresponding heads in the Trial Balance.
• Name the heads In the invoice on which GST Is not paid.

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Accounting and Records

• Whether accounts are prepared on mercantile basis or cash basis?
• Whether the Accounts are maintained electronically? If yes, the name of accounting packages / computer software installed for maintaining accounts in the units like Tally, FAS etc:

Making of GST return

• List the ledger/ accounts from where the monthly gross amount received is taken for taxable service.
• List the ledger/ accounts from where the gross monthly amount billed Is taken.

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Place of Supply

• Whether place of supply Is correctly determined In case of supplies so as to identify supplies as whether inter-state or tare state supplies?
• Whether any services has been exported to “Associated Enterprises”. If yes, mention the value thereof.

Note: The above list is just illustrative not exhaustive.

Effect of not replying the notice:-

In case, if the taxpayer does not reply to the notice within given time limit, then he shall be liable for penalties and other proceedings as per GST Law.

Representative

Taxman can give his authority to another representative or a practising Chartered Accountant to look into this matter.

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Findings of GST Audit

On conclusion of an audit, the authorised officer will inform the taxman about the Findings of the audit within 30 days. If the audit results in finding of unpaid tax/ short paid tax or wrong input tax credit claimed, then proper actions are taken as per GST LAW.

It is advisable to be very much careful while uploading details in GST Portal. Also, Tax professionals must analyse each and every Transaction from GST point of view. If you find it a bit useful. Do share it. It will make my day.

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The author of above article is Punit Chaplot.

Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon. 
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