Assessment and Audit

Q 1. Who is the person responsible to make assessment of taxes payable under the Act?

Ans. Every person registered under the Act shall himself
assess the tax payable by him for a tax period and after
such assessment he shall file the return required under
section 39.

Q 2. When can a taxable person pay tax on a provisional basis?

Ans. As a taxpayer has to pay tax on self-assessment basis,
a request for paying tax on provisional basis has to come
from the taxpayer which will then have to be permitted
by the proper officer. In other words, no tax officer can
suo-moto order payment of tax on provisional basis. This
is governed by section 60 of CGST/SGST Act. Tax can be
paid on a provisional basis only after the proper officer has
permitted it through an order passed by him. For this
purpose, the taxable person has to make a written request
to the proper officer, giving reasons for payment of tax on
a provisional basis. Such a request can be made by the
taxable person only in such cases where he is unable to
determine:

a) the value of goods or services to be supplied by
him, or

b) determine the tax rate applicable to the goods
or services to be supplied by him.

In such cases the taxable person has to execute a bond in
the prescribed form, and with such surety or security as
the proper officer may deem fit.

Q 3. What is the latest time by which final assessment is required to be made?

Ans. The final assessment order has to be passed by the
proper officer within six months from the date of the
communication of the order of provisional assessment.
However, on sufficient cause being shown and for reasons
to be recorded in writing, the above period of six months
may be extended:

a) by the Joint / Additional Commissioner
for a further period not exceeding six months,
and

b) by the Commissioner for such further period as
he may deem fit not exceeding fours.

Thus, a provisional assessment can remain provisional for a
maximum of five years.

Q 4. Where the tax liability as per the final assessment is higher than in provisional assessment, will the taxable person be liable to pay interest?

Ans. Yes. He will be liable to pay interest from the date
the tax was due to be paid originally till the date of actual
payment.

Q 5. What recourse may be taken by the officer in case proper explanation is not furnished for the discrepancy detected in the return filed, while conducting scrutiny under section 61 of CGST ACT?

Ans. If the taxable person does not provide a satisfactory
explanation within 30 days of being informed (extendable
by the officer concerned) or after accepting discrepancies,
fails to take corrective action in the return for the month
in which the discrepancy is accepted, the Proper Officer
may take recourse to any of the following provisions:

(a) Proceed to conduct audit under Section 65 of the Act;

(b) Direct the conduct of a special audit under Section 66 which is to be conducted by a Chartered
Accountant or a Cost Accountant nominated for
this purpose by the Commissioner; or

(c) Undertake procedures of inspection, search and
seizure under Section 67 of the Act; or

(d) Initiate proceeding for determination of
tax and other dues under Section 73 or
74 of
the Act.

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Ans. The proper officer has to first issue a notice to the
defaulting taxable person under section 46 of CGST/SGST
Act requiring him to furnish the return within a period of
fifteen days. If the taxable person fails to file return within
the given time, the proper officer shall proceed to assess
the tax liability of the return defaulter to the best of his
judgement taking into account all the relevant material
available with him. (Section 62).

Q 7. Under what circumstances can a best judgment assessment order issued under section 60 be withdrawn?

Ans. The best judgment order passed by the Proper
Officer under section 62 of CGST/SGST Act shall
automatically stand withdrawn if the taxable person
furnishes a valid return for the default period (i.e. files the
return and pays the tax as assessed by him), within thirty
days of the receipt of the best judgment assessment order.

Q 8. What is the time limit for passing assessment order u/s 62 (Best Judgment) and 63 (Non-filers)?

Ans. The time limit for passing an assessment order under
section 62 or 63 is five years from the due date for
furnishing the annual return.

Ans. Section 63 of CGST/SGST Act provides that in such
a case, the proper officer can assess the tax liability and
pass an order to his best judgment for the relevant tax
periods. However, such an order must be passed within a
period of five years from the due date for furnishing the
annual return for the financial year to which non-payment
of tax relates.

Q 10. Under what circumstances can a tax officer initiate Summary Assessment?

Ans. As per section 64 of CGST/SGST Act, Summary
Assessments can be initiated to protect the interest of
revenue when:

a) the proper officer has evidence that a taxable
person has incurred a liability to pay tax under
the Act, and

b) the proper officer believes that delay in passing
an assessment order will adversely affect the
interest of revenue.

Such order can be passed after seeking permission from the
Additional Commissioner / Joint Commissioner.

Q 11. Other than appellate remedy , is there any other recourse available to the taxpayer against a summary assessment order?

Ans. A taxable person against whom a summary
assessment order has been passed can apply for its
withdrawal to the jurisdictional Additional/Joint
Commissioner within thirty days of the date of receipt
of the order. If the said officer finds the order erroneous,
he can withdraw it and direct the proper officer to carry
out determination of tax liability in terms of section 73
or 74 of CGST/SGST Act. The Additional/Joint
Commissioner can follow a similar course of action on his
own motion if he finds the summary assessment order to
be erroneous (section 64 of CGST/SGST Act).

Q 12. Is summary assessment order to be necessarily passed against the taxable person?

Ans. No. In certain cases, like when goods are under
transportation or are stored in a warehouse, and the
taxable person in respect of such goods cannot
be ascertained, the person in charge of such goods shall
be deemed to be the taxable person and will be assessed
to tax (proviso to Section 64 of CGST/SGST Act).

Q 13. Who can conduct audit of taxpayers?

Ans. There are three types of audit prescribed in the GST
Act(s) as explained below:

(a) Audit by Chartered Accountant or a Cost Accountant:
Every registered person whose turnover exceeds the
prescribed limit, shall get his accounts audited by a
chartered accountant or a cost accountant. (Section 35(5) of the CGST/SGST Act)

(b) Audit by Department: The Commissioner or any officer
of CGST or SGST or UTGST authorized by him by a
general or specific order, may conduct audit of any
registered person. The frequency and manner of audit
will be prescribed in due course. (Section 65 of the
CGST/SGST Act)

(c) Special Audit: If at any stage of scrutiny, inquiry,
investigations or any other proceedings, if department
is of the opinion that the value has not been correctly
declared or credit availed is not with in the normal
limits, department may order special audit by
chartered accountant or cost accountant, nominated
by department. (Section 66 of the CGST/SGST Act)

Q 14. Whether any prior intimation is required before conducting the audit?

Ans. Yes, prior intimation is required and the taxable
person should be informed at least 15 working days prior to
conduct of audit.

Q 15. What is the period within which the audit is to be completed?

Ans. The audit is required to be completed within
3 months from the date of commencement of audit. The
period is extendable for a further period of a maximum of 6
months by the Commissioner.

Q 16. What is meant by commencement of audit?

Ans. The term ‘commencement of audit’ is important
because audit has to be completed within a given time
frame in reference to this date of commencement.
Commencement of audit means the later of the following:

a) the date on which the records/accounts called
for by the audit authorities are made available
to them, or

b) the actual institution of audit at the place of
business of the taxpayer.

Q 17. What are the obligations of the taxable person when he receives the notice of audit?

Ans. The taxable person is required to:
a) facilitate the verification of accounts/records
available or requisitioned by the authorities,
b) provide such information as the authorities may
require for the conduct of the audit, and
c) render assistance for timely completion of the
audit.

Q 18. What would be the action by the proper officer upon conclusion of the audit?

Ans. The proper officer shall, on conclusion of audit,
within 30 days inform the taxable person about his
findings, reasons for findings and the taxable person’s
rights and obligations in respect of such findings.

Q 19. Under what circumstances can a special audit be instituted?

Ans. A special audit can be instituted in limited
circumstances where during scrutiny, investigation, etc. it
comes to the notice that a case is complex or the revenue
stake is high. This power is given in section 66 of CGST
/SGST Act.

Q 20. Who can serve the notice of communication for special audit?

Ans. The Assistant / Deputy Commissioner is to serve the
communication for special audit only after prior
approval of the Commissioner.

Q 21. Who will do the special audit?

Ans. A Chartered Accountant or a Cost Accountant so
nominated by the Commissioner may undertake the audit.

Q 22. What is the time limit to submit the audit report?

Ans. The auditor will have to submit the report within 90
days or within the further extended period of 90 days.

Q 23. Who will bear the cost of special audit?

Ans. The expenses for examination and audit including the
remuneration payable to the auditor will be determined
and borne by the Commissioner.

Q 24. What action the tax authorities may take after the special audit?

Ans. Based on the findings / observations of the special
audit, action can be initiated under Section 73 or Section
74 of the CGST/SGST Act.

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