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SOP for GST officers to be followed during investigation and audit

by | Sep 14, 2020 | Insight

The Central Board of Indirect Taxes and Customs (‘CBIC’) has issued GST Ready Reckoner on August 1, 2020.

This document captures roles, responsibilities and duties of GST officers like Superintendents, Inspectors etc. during investigation or departmental audits. In this update, we apprise you regarding procedure to be adopted by GST officers as per the Reckoner:

  1. Procedure to be adopted for undertaking departmental audits for Financial Year 2018-19

Selection of taxpayers

 

  • The following methodology needs to be adopted while selecting taxpayers:

 

Percentage Basis of selection
70 Based on risk scores given by The Directorate General of Analytics and Risk Management (‘DGARM’)
20 Based on inputs of jurisdictional Audit Commissioners
10 Random basis by DGARM using algorithms / statistical techniques

 

Calling for documents from taxpayers

  • The authorities shall intimate dates of audit in GST-AD01 to taxpayer at least 15 days in advance.
  • Taxpayer needs to be ready with following information:

 

– Records maintained

– Audited financial statements and trial balance

– Cost audit report as per Section 148 of the Companies Act, 2013 (wherever applicable)

– Income-tax audit report (wherever applicable)

Duration of audit

 

  • The following indicative timelines have been given to authorities for completing audit:

 

Type of Taxpayer Timeline (working days)
Small 2 to 4
Medium 4 to 6
Large 6 to 8

 

  • If audit period exceeds one FY, above time limit would increase by 25 percent for each FY. The number of days can be increased to 8, 12 and 16 working days for Small, Medium and Large taxpayers respectively if audit period exceeds 5 years.

 

  1. Recovery of tax along with interest basis DGARM report

 

DGARM will issue report and highlight cases falling under category ‘pending with detection / recovery’ for taxpayers including following and take appropriate action thereafter:

 

  • April to November 2019: Tax liability declared more than Rs.1 crore and tax paid in cash more than Rs.1 lakh; or

 

  • Inward supplies received in GSTR-2A more than Rs.25 lakhs.

 

  1. Cases pertaining to erstwhile laws i.e. Central Excise and Service Tax law

 

  • The authorities need to issue following documents for FY 2015-16 and 2016-17 where a matter is taken up:

 

– Letter with DIN (seeking documents required for audit / non-filers of GSTR-3B)

– Summon

– SCN (if documents are not received)

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