Detailed Overview of CGST Rules: Chapter 11 on Assessment and Audit Procedures

This document explores Chapter 11 of the Central Goods and Services Tax (CGST) Rules, which outlines procedures for assessment and audit. The information provided is based on the official CGST Rules document from cbec.gov.in.

Recent Policy Updates

Several important changes related to GST assessment and audit have been introduced:

• December 29, 2021: The deadline for filing GSTR-9 and self-certified GSTR-9C for the financial year 2020-21 was extended until February 28, 2022.
• May 28, 2021: Following the 43rd GST Council meeting, GSTR-9 remained optional for taxpayers with a turnover up to Rs. 2 crore. Additionally, GSTR-9C can now be self-certified by taxpayers with a turnover of Rs. 5 crore or less, starting from FY 2020-21.
• February 1, 2021: The Union Budget 2021 removed the requirement for GST audits by specific professionals like Chartered Accountants and Cost Accountants. This amendment to Sections 35 and 44 means taxpayers now only need to file GSTR-9 (annual returns) on a self-certification basis through the GST portal, eliminating the need for GSTR-9C (reconciliation statement). The effective date for this change for GSTR-9C for FY 2019-20 remained unchanged, with clarification pending from the government regarding the applicability for subsequent financial years.

Provisional Assessment

A registered person who wishes to pay tax on a provisional basis, as per Section 60(1), must submit an electronic application with supporting documents in FORM GST ASMT-01 via the common portal or a Facilitation Centre.

Upon receiving this application, the proper officer may issue a notice in FORM GST ASMT-02, requesting additional information or documents. The applicant must respond to this notice using FORM GST ASMT-03 and has the option to appear in person.

The proper officer will then issue an order in FORM GST ASMT-04, approving provisional tax payment. This order will specify the provisional value or rate, or both, and the bond amount and security required, which cannot exceed 25% of the bond value.

In accordance with Section 60(2), the registered person must execute a bond in FORM GST ASMT-05, along with a bank guarantee as security, for the amount determined. A bond submitted under the State Goods and Services Tax Act or Integrated Goods and Services Tax Act is considered valid under the CGST Act. The term "amount" in this context includes Integrated Tax, Central Tax, State Tax, Union Territory Tax, and Cess.

Subsequently, the proper officer will issue a notice in FORM GST ASMT-06 to request necessary records for finalizing the assessment under Section 60(3). A final assessment order, indicating any payable or refundable amount, will then be issued in FORM GST ASMT-07.

After the final assessment order is issued, the applicant can file an application in FORM GST ASMT-08 to request the release of their security.

The proper officer will release the security, provided the applicant has paid any specified amounts, by issuing an order in FORM GST ASMT–09 within seven working days of receiving the application.

Scrutiny of Returns

When a registered person's return is chosen for scrutiny, the proper officer will examine it as per Section 61, cross-referencing available information. If discrepancies are found, a notice in FORM GST ASMT-10 will be issued, detailing the discrepancies and requesting an explanation within 30 days, or an extended period if permitted. This notice may also quantify the tax, interest, and other amounts due.

The registered person can either accept the discrepancies and pay the outstanding tax, interest, and other amounts, informing the officer in FORM GST ASMT-11, or provide an explanation for the discrepancies in the same form.

If the explanation or information provided by the registered person is satisfactory, the proper officer will confirm this in FORM GST ASMT-12.

Assessment in Certain Cases

An assessment order made under Section 62(1) will be issued in FORM GST ASMT-13.

For best judgment assessment under Section 63, the proper officer will issue a notice in FORM GST ASMT-14, outlining the grounds for the proposed assessment. After giving the taxable person fifteen days to respond, an order will be passed in FORM GST ASMT-15.

A summary assessment order, as per Section 64(1), will be issued in FORM GST ASMT-16.

A person referred to in Section 64(2) may apply to withdraw a summary assessment order using FORM GST ASMT–17.

The decision to withdraw or reject the application under Section 64(2) will be communicated in FORM GST ASMT-18.

Audit

An audit conducted under Section 65(1) will cover a financial year or multiple financial years.

When an audit of a registered person is initiated under Section 65, the proper officer will issue a notice in FORM GST ADT-01, as per Section 65(3).

The authorised proper officer, assisted by a team, will verify the documents used to maintain accounts, filed returns and statements, and the accuracy of turnover, exemptions, deductions claimed, applicable tax rates, input tax credit availed, refunds claimed, and other relevant matters. Observations will be recorded in audit notes.

Any discrepancies identified during the audit will be communicated to the registered person, who may provide a reply. The proper officer will finalize the audit findings after considering the response.

Upon completing the audit, the findings will be communicated to the registered person in FORM GST ADT-02, in accordance with Section 65(6).

Special Audit

If a special audit is mandated under Section 66, the designated officer will issue a directive in FORM GST ADT-03, instructing the registered person to have their records audited by a specified Chartered Accountant or Cost Accountant.

Following the conclusion of the special audit, the registered person will be informed of its findings in FORM GST ADT-04.