GST Procedure

Goods and Service Tax (GST) is structured for efficient tax collection, reduction in corruption, easy inter-state movement of goods and a lot more.

The GST Law provides for self-assessment to facilitate easy compliance and payment of taxes. It also explains the notices, the demand and recovery provisions when the taxes are unpaid, short paid and/or returns are not filed.

Audits

Audit under GST is the examination of records maintained by a registered dealer. The aim is to verify the correctness of information declared, taxes paid and to assess the compliance with GST.

Audit by Registered Dealer

Upto FY 2019-20, Every registered dealer whose turnover during a financial year exceeded the Rs 2 crore had to get his accounts audited by a CA or a CMA. ICAI had clarified through an announcement dated 28th September 2018 that an Internal Auditor cannot undertake GST Audit simultaneously. 

From FY 2020-21 onwards, the mandatory GST audit requirement and CA/CMA certification in form GSTR-9C was removed and replaced with the self-certification of form GSTR-9C (reconciliation statement).

Audit by GST Tax Authorities

General Audit: The commissioner or on his orders an officer may conduct an audit of any registered dealer.

Special Audit: The department may conduct a special audit due to the complexity of the case and considering the interest of revenue. The CA or a CMA will be appointed to conduct the audit.

Assessments under GST

Assessment under GST means the determination of tax liability under GST. Assessment under GST has been divided into 5 types:

Self Assessment

Under GST, every registered taxable person shall assess the taxes payable by them on their own, and furnish a return for each tax period. This is called self-assessment.

Provisional Assessment

A registered dealer can request the officer for provisional assessment if he is unable to determine the value of goods or rate of tax. The proper officer can allow the assessee to pay tax on a provisional basis at a rate or a value specified by him.

Scrutiny Assessment

A GST officer can scrutinize the return to verify its correctness. The officer will ask for explanations on any discrepancies noticed in the returns. From FY 19-20 onwards, the department has launched automated return scrutiny in May 2023 to make the process easier for officers and transparent for taxpayers.

Summary Assessment

Summary Assessment is done when the assessing officer comes across sufficient grounds to believe any delay in showing a tax liability can harm the interest of the revenue. To protect the interest of the revenue, he can pass the summary assessment with the prior permission of the additional/joint commissioner.

Best Judgement Assessment

Best judgement assessment under GST can be of the following two kinds-

1. Assessment of non-filers of returns If a registered taxable person does not file his return even after getting a notice, the proper officer will assess the tax liability to the best of his judgment using the available relevant material.

2. Assessment of unregistered persons This assessment is done when a taxable person fails to obtain registration even though he is liable to do so. The officer will assess the tax liability of such persons to the best of his judgement. The taxable person will receive a show cause notice and an opportunity of being heard.

Demand and Recovery

Demand and recovery provisions are applicable when a registered dealer has paid tax incorrectly or not paid tax at all. It is also applicable when an incorrect refund or ITC is claimed by the dealer.

The proper officer will issue a show cause notice along with a demand for payment of tax and penalty in case of fraud. Demands can arise in the following cases:

• Unpaid or short paid tax or wrong refund
• Tax collected but not deposited with the Central or a State Government
• CGST/SGST paid when IGST was payable and vice versa.

If demand is not paid, the GST authority starts recovery proceedings 

Advance Rulings

Advance Ruling under GST means seeking clarifications from GST authority on certain tax matters before starting the proposed activity. This helps to reduce costly litigation.

An advance ruling is a written decision given by the tax authority to an applicant on queries related to the supply of goods/services.

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