Audit

2 sections authoredCGST Act, 2017

s. 65Audit by tax authorities

Section 65 authorises the department to audit a registered person's books — at its premises or in the office — within fixed time limits. Audit findings are not a demand: any tax found short must be pursued through the ordinary adjudication provisions.

Under section 65(1) of the CGST Act, 2017 the Commissioner, or an officer authorised by general or specific order, may audit any registered person for the period, at the frequency and in the manner prescribed (Rule 101).
At least fifteen working days' notice must be given (Form GST ADT-01); the audit must be completed within three months of commencement, extendable by the Commissioner by up to six months.
Findings, with reasons and the person's rights and obligations, must be communicated within thirty days of conclusion (Form GST ADT-02).
Tax found short paid, wrongly refunded, or credit wrongly availed or utilised is pursued under section 73, 74 or 74A; the findings themselves are not a demand.
In LJ-Victoria Properties v Union of India (2024) the Bombay High Court upheld an audit of a year during which the person was registered, though its registration had since been cancelled.

Text, commentary and cases on section 65 →

s. 66Special audit

Section 66 lets an Assistant Commissioner, with the Commissioner's approval, have a taxpayer's books examined by an independent chartered or cost accountant when a case is too complex for ordinary scrutiny. The department pays for it, and the taxpayer must be heard before its findings are used.

Under section 66(1) of the CGST Act, 2017 an officer not below Assistant Commissioner may, during scrutiny, inquiry, investigation or other proceedings, and with the Commissioner's prior approval, direct a registered person to have its records audited by a chartered or cost accountant nominated by the Commissioner.
The condition is that, considering the nature and complexity of the case and the interest of revenue, the officer is of the opinion that value has not been correctly declared or credit availed is not within normal limits.
The report is due within ninety days, extendable by ninety days (section 66(2)); the taxpayer must be heard on any material proposed to be used against it (section 66(4)).
The Commissioner determines and pays the cost (section 66(5)); detected short payments are pursued under section 73, 74 or 74A (section 66(6)).

Text, commentary and cases on section 66 →