MANAGEMENT OF GST AUDIT - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

5. MANAGEMENT OF GST AUDIT In order to monitor, co-ordinate and guide the effective implementation of the audit system, the Board has set up the Directorate General of Audit as the nodal agency. At the local level, management of audit is entrusted to GST Audit Commissionerates who conduct audits, and are supervised by respective Zonal Principal Chief Commissioners/Chief Commissioners. 5.1 Directorate General of Audit: (i) The Directorate General of Audit, Indirect Taxes and Customs, New Delhi, headed by Principal Director General/ Director General, has been mandated with the task of formulating the comprehensive audit processes and techniques through a CGST Audit Manual [Goods and Services Tax Audit Manual, 2019 (GSTAM, 2019) is currently in force]. The Directorate, in coordination with its seven Zonal Units located at Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Mumbai (each headed by a Principal Additional Director General/ Additional Director General) further ensures efficient and effective implementation of the audit system by devising, evolving and improving audit techniques and procedures under CGST Audit manual. The audit performance of the CGST audit field formations is monitored and evaluated on both quantitative and qualitative aspects through the standards prescribed in the Manual for Quality Assurance Review and Audit performance Index, 2021 (QAR API Manual), issued and administered by DG ( Audit). (ii) The selection of registered CGST taxpayers for audit is jointly carried out by the DG Audit and the Directorate General of Analytics and Risk Management (DGARM), based on selected risk parameters. 5.2 Principal Chief Commissioner / Chief Commissioner, Central GST: Principal Chief Commissioners/ Chief Commissioners are responsible for administrative supervision of the Audit Commissionerates under their charge. They also approve 20% of the taxpayers to be audited as selected by the CGST Audit Commissionerates out of the list of taxpayers provided by DG Audit/ DGARM based on local risk parameters, 5.3 CGST Audit Commissionerate: The CGST Audit Commissionerate is headed by a Principal Commissioner of CGST Audit / Commissioner of CGST Audit. The Commissionerate comprises of Audit Circles, Planning and coordination section, Risk management and Quality Assurance section and other sections. The Audit Circles comprise of Audit Groups who conduct audits. The Principal Commissioner of CGST Audit / Commissioner of CGST Audit is required to ensure proper selection of taxpayers to be audited during the year under local parameters, hold Monitoring Committee Meeting (MCM) once a month to take decision about the acceptability of all audit objections, review audit performance and assess the training needs of the auditors and organize training programmes in coordination with NACIN. 5.4 Advisor Cost, Deputy Director Cost and Assistant Director Cost: The officers of Indian Cost Accounts Service (ICoAS) are posted in various field formations of the CBIC. These officers are in the post of Advisor (Cost), Director/ Joint Director (Cost) and Deputy/ Assistant Director (Cost). Since they are proficient in cost and accounting matters, their services can be helpful for audit and can be utilised by auditors in understanding books of accounts and other related matters, including for training purposes. 5.5 Staffing norms prescribed in GST Audit Manual, 2019 for CGST Audit Commissionerate: i. The Audit Groups deployed for audit of large taxpayers may comprise 2-3 Superintendents and 3-5 Inspectors. For medium taxpayers, the audit group may include 1 2 Superintendents and 2 3 Inspectors. For small taxpayers, the Audit group may include 1 Superintendents and 1 2 Inspectors. ii. Groups for large taxpayers, medium taxpayers and small taxpayers should be in such numbers that the following distribution of manpower deployment in audit groups is achieved. a. 40% of manpower for large taxpayers b. 30% of manpower for medium taxpayers c. 20%of manpower for small taxpayers d. 10% of manpower for planning, coordination and follow up. The taxpayers are categorised into large, medium and small categories based on their annual turnover, the threshold of which may vary in different Commissionerates.