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 would like to understand which provision governs this, what it entitles me to, and how long I have before the remedy lapses. I also want to know whether I need a lawyer for this or can do it myself.

MyVakeel Legal Desk · Accepted Answer

In India, the answer to "What happens during a GST departmental audit under Section 65" turns on 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 points below set out the position and then what to do about it, in the order it should be done.

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 you are unsure whether your facts fall inside Central Goods and Services Tax Act, 2017, Section 65, that is worth checking with an advocate before you commit to a route, because switching later costs time. 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 tax law.