Special Audit Section 66 - GST Ready Reckoner - GST

Special Audit Circumstances can a special audit to be conducted [ section 66(1) of CGST Act read with rule 102 of CGST Rules] A special audit can be instituted in limited circumstances where at any stage of scrutiny, inquiry, investigation or any other proceedings, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits Prior approval of commissioner is necessary before ordering special audit. The chartered accountant or a cost accountant must be nominated by the Commissioner.( Circular No. 33/2018-Customs clarifies that Cost Accountants have also been recognized for various certifications/representations like in Section 35 , Section 66 , Section 116 and Section 48 read with Rule 24 of Return rules) Where special audit is required to be conducted in accordance with the provisions of section 66, the officer referred to in the said section shall issue a direction in FORM GST ADT-03 to the registered person to get his records audited by a chartered accountant or a cost accountant specified in the said direction. On conclusion of the special audit, the registered person shall be informed of the findings of the special audit in FORM GST ADT-04. Access of premises:- This provision of law is meant to allow an audit party of CGST/SGST or C AG or a cost accountant or chartered accountant nominated under section 66 of CGST / SGST Act , access to any business premises without issuance of a search warrant for the purposes of carrying out any audit, scrutiny, verification and checks as may be necessary to safeguard the interest of revenue[ FAQ Qus. no. 15 ] Section 66(2) Time limit to submit the audit report The auditor will have to submit the report within 90 days or within the further extended period of 90 days. This can be done by the Commissioner when he is satisfied that the audit cannot be completed in three months. The reasons for the same must also be recorded in writing. Extension of time limit :- Assistant Commissioner may, on an application made to him in his behalf by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by a further period of ninety days. Who will bear the expenses of audit The expenses for examination and audit including the remuneration payable to the auditor will be determined and borne by the Commissioner. Audit is already conducted This audit will be in addition to the audit already conducted under any other statue. Section 66(3) overrides provisions of any audit conducted under this act or any other law. Section 66(4) Opportunity of being heard The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-section (1) which is proposed to be used in any proceedings against him under this Act or the rules made thereunder. Action taken by the Commissioner after conducting special Audit [ Section 66(6) of CGST Act ] Based on the findings / observations of the special audit, action can be initiated under Section 73 or Section 74 [or Section 74A ( w.e.f. 01.11.2024 vide N.No. 17/2024 dated 27.09.2024 ) Inserted vide Finance (No. 2) Act, 2024 ] of the CGST/SGST Act. The action would also depend on whether the taxpayer voluntarily pays the requisite tax, interest @18% under section 50 of CGST Act and penalty as per section 74 of CGST Act.[ Under Section 73 ] In case of fraud/suppression cases , if the taxpayer pays the requisite tax with 18% interest and 15% penalty, no notice will be issued by department and proceedings would be concluded. Post issue of notice , in case he pays the requisite tax, 18% interest and 25% penalty within 30 days, proceedings shall be concluded. Post adjudication , in case he pays the requisite tax, 18% interest and 50% penalty within 30 days of order, proceedings shall be concluded. [ Under section 74 ] Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onward. [ Section 74A (w.e.f. 01.11.2024 vide N.No. 17/2024 dated 27.09.2024)] [ Inserted vide Finance (no. 2) Act, 2024 ]