Goods and Services Tax

Possible positive impact of GST Audit by a CA or a CWA

Goods and Services Tax – GST – By: – Shilpi Jain – Dated:- 10-1-2019 Last Replied Date:- 11-1-2019 – As per section 35(5), 44(2) of the CGST Act, 2017 read with rule 80(3) of the CGST Rules, 2017, every registered person whose aggregate turnover during a financial year exceeds two crore rupees, shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner. Initially there was no clarity whether a separate audit will have to be carried out for the purposes of GST or the audit done under the existing laws would suffice. However, with the Form GSTR – 9C being notified it had become clear that a separate audit report need not be issued for the purposes of GST and that the already existing audited financials of the assessee can be attach

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r 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 this Act or the rules made thereunder. From the above definition it seems that there is a vast responsibility laid on the GST auditor whereby he has to go the extent of assessing the level of compliance with the provisions of the Act. However, since the paper writer s intention in the present case is not to resolve the above conflict but to bring out what positive can be taken out of this audit exercise, it is not discussed here as to which view is correct in law. Further, before getting into the subject of the positive impact, let us classify the assessees into the following basic categories: Those who do not wish to take any risk and take the conservative approach in complying with the law. Those, for whom business needs are the first preference and are ready to take an aggressive

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essees who came under the department scanner, were burdened heavily with interest, penalties and litigation costs. All in all, it was creating a very negative environment when it came to compliance under the indirect tax laws. However, the scenario should be a little different (if not more) under GST. Under GST the assessee has the chance of getting an audit done by a qualified professional and to understand the nuances of the law (including the procedural aspects) by way of a comprehensive compliance report whereby the assessee can take a reasoned decision on various aspects while being aware of the risk that it is carrying for the non-compliance, if any. Further, all of this being within a reasonable time of the completion of the transaction, as compared with 3 to 4 years under the earlier laws. Another way of reducing the risk of non-compliance and to facilitate a reasoned decision making w.r.t. GST would be the services of a professional as a consulting retainer who would: Clarify

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e to be complied with, as against the scheme of things that existed under the earlier laws. It is pertinent to point out here that the penalties under Indirect tax laws are more stringent than those in the direct tax laws as IT is on income whereas IDT is on revenue. Hence the stakes are very high (which could many times be fatal to the business). Hence, there is a need to be more cautious under the IDT laws. Under GST when the audited financials are submitted with the reconciliations in Form GSTR-9C, it will become very difficult for the department to invoke the extended period of limitation. Further another benefit of the audit provision is that now it would be mandatory for all assesses crossing the prescribed limit to get the IDT audit done, which would have otherwise not been sanctioned by the management of the small assesses. Hence it would be very important to hire a professional who has very good knowledge of the law to get the maximum benefit out of the GST provisions. – Reply

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