Tax liability on supply of goods and services is computed by RP under self-assessment scheme provided in section 59 of CGST Act. In order to ensure whether the tax liability has been correctly computed and discharged by RP, it becomes essential for the department to conduct an audit of records maintained by RP.

Section 65(1)

Commissioner or any officer authorised by him,

by way of a general or a specific order,

may undertake audit of any RP for such period, at such frequency and in such manner as may be prescribed.

Section 65(1) confers power on the commissioner, or an officer authorized by him to carry out audit of any RP by issuing a general order or specific order.

Audit of only Registered person not taxable person can be undertaken.

General order shall specify the criteria and all registered person fulfilling the criteria, shall get covered in the audit. On the other hand, special order for audit shall be issued in the name of particular registered person or class of person.

Rule 101(1)

The period of audit to be conducted u/s 65(1) shall be a financial year [1][or part thereof] or multiples thereof.

Section 65(2)

The officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or in their office.

The option to choose the place of audit has been given to authorized officer.

Section 65(3) read with rule 101(2)

RP shall be informed by way of a notice in ADT-01 not less than 15 working days prior to the conduct of audit.

Section 65(4)

Audit u/ss (1) shall be completed within 3 months from the date of commencement of the audit

Proviso to Section 65(4)

Where the Commissioner is satisfied that audit in respect of such RP cannot be completed within 3 months,

he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding 6 months.

Explanation to Section 65(4)

For the purposes of this sub-section, the expression “commencement of audit” shall mean

the date on which the records and other documents, called for by the tax authorities, are made available by RP or

the actual institution of audit at the place of business,

whichever is later.

Section 65(5)

During the course of audit, the authorised officer may require the RP,

(i) to afford him the necessary facility to verify the books of account or other documents as he may require;

(ii) to furnish such information as he may require and render assistance for timely completion of the audit.

Rule 101(3)

PO authorised to conduct audit shall, with the assistance of the team of officers and officials accompanying him, verify

(i) the documents on the basis of which the books of account are maintained and

(ii) the returns and statements furnished under the provisions of the Act and the rules made there under,

(iii) the correctness of the turnover, exemptions and deductions claimed, the rate of tax applied in respect of the supply of goods or services or both,

(v) the ITC availed and utilised, refund claimed, and

(vi) other relevant issues and record the observations in his audit notes.

Section 65(6) read with Rule 101(5)

Within 30 days on conclusion of audit,

PO shall, inform the RP in GST ADT-02,

about the findings, his rights and obligations and the reasons for such findings in GST ADT-02

Here the right and obligations means what are the legal option available to RP with respect to such findings.

Rule 101(4)

PO may inform the RP of the discrepancies noticed, if any, as observed in the audit and the said person may file his reply and

PO shall finalise the findings of the audit after due consideration of the reply furnished.

Section 65(7)

Where the audit conducted u/ss (1) results in detection of

tax not paid or short paid or

erroneously refunded, or

ITC wrongly availed or utilised,

PO may initiate action u/s 73 or 74.