What happens during a GST departmental audit under Section 65

Question

The GST department has issued an audit notice for my business and I want to know what to expect and how to prepare. I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

What happens during a GST departmental audit under Section 65 is governed in India primarily by Central Goods and Services Tax Act, 2017, Section 65, Central Goods and Services Tax Act, 2017, Section 66 and CGST Rules, 2017, Rule 101. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

Section 65 empowers the Commissioner to undertake audit of any registered person's records for a financial year or part thereof, with prior notice in Form GST ADT-01 at least fifteen working days before the audit commences.

The audit must ordinarily be completed within three months from its commencement, extendable by a further six months by the Commissioner for reasons recorded in writing, and findings are communicated in Form GST ADT-02 detailing discrepancies, if any.

Where the registered person's books are found inadequate for a proper audit, the department may instead direct a special audit under Section 66 by a chartered or cost accountant nominated by the Commissioner, at the taxpayer's expense.

Discrepancies detected in audit that are not voluntarily paid can culminate in a formal demand notice under Section 73 or 74 depending on whether suppression or fraud is alleged, triggering the usual adjudication and appeal process.

What to do next: 1) Respond to the ADT-01 notice and keep all records ready; 2) Cooperate during the audit and clarify discrepancies with documentary evidence; 3) Review the audit findings in ADT-02 and pay any admitted liability voluntarily; 4) Contest disputed findings through reply to a show cause notice if issued.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under Central Goods and Services Tax Act, 2017, Section 65 carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in this practice area.