Taxation Law

Unit – IV
 Content of Unit – IV
A Input Tax Credit, Levy and Exemption of Input Tax Credit: Conditions, Registration,
Persons liable and not liable for registration, Procedure, Deemed Registration,
Cancellation and Revocation of Registration
B Payment of Tax, interest, penalty etc., Tax Deduction at Source and Collection of
Tax at source, filing of various returns : Monthly, Quarterly, Annually, Refund of
Tax, Interest on delayed refunds, Consumer Welfare Fund
C Assessment: Self and Provisional, Scrutiny of returns, Audit, Powers of
Inspection, Search, Seizure and Arrest, Provisions relating to Appeal and
Reasons, ADR Mechanism
D Offences and Penalties under the GST Act
 Input Tax Credit
 According to Section 2(62) of the Act, Input
Tax Credit means the credit of Input Tax
 According to Section 2(63) of the Act, Input
Tax means CGST, SGST, IGST or UTGST
charged on any supply and includes tax paid
through RCM.
 According to Section 2(59) of the Act, Input
means Any goods except capital goods used
or intended to be used by a supplier in the
course or furtherance of business.
 GST & Input Tax Credit
 Input Tax Credit is the backbone of the GST regime. GST is nothing but a
value added tax on goods and services combined. Chapter 5 of the GST Act
deals with ITC.

Section Eligibility & Conditions Section Apportionment of credit

16 for taking ITC 17 and blocked credits

Taking input tax credit in

Section Availability of credit in Section respect of inputs and capital
18 special circumstances 19 goods sent for job work

Manner of distribution of
Section
credit by Input Service Section Manner of recovery of
20 21 credit distributed in excess
Distributor
ITC Availment Utilisation : GST Model
ITC Availment Utilisation : GST Model
 Manner of taking ITC [Section 16]
a) Registered person only entitled to take credit of input tax
b) The following is must:
- he is in possession of a tax invoice or debit note issued by
a supplier
- he has received the goods or services or both
- the tax charged in respect of such supply has been
actually paid to the Government
- he has furnished the return under section 39
 Documentary Requirement

 The ITC can be availed based on the following documents:

1. Tax invoice issued by supplier
2. Invoice issued under RCM
3. A debit note issued by supplier
4. An ISD invoice or ISD credit note
 Eligibility
 Registered person
- Conditions:
1. Goods & services are used or intended to be used in the course of
business
2. Possess tax Invoice
3. Possess debit note
4. Any other tax paying document
5. Has received the goods and paid tax on it
ITC on goods received in lots
 Apportionment of credit and blocked credit [Sec 17]

 Where the goods or services or both are used

partly for the purpose of any business and
partly for other purposes – ITC shall be
restricted to so much of the input tax as is
attributable to the purposes of his business.
 Apportionment of credit and blocked credit [Sec 17]

 Where the goods or services or both are used partly for

effecting taxable supplies including zero-rated supplies or
under the Integrated Goods and Services Tax Act, and partly
for effecting exempt supplies under the said Acts, the
amount of credit shall be restricted to so much of the input
tax as is attributable to the said taxable supplies including
zero-rated supplies.
 Apportionment of credit and blocked credit [Sec 17]

Apportionment of ITC in Apportionment of ITC

case of goods and services in case of goods and
used services used

Partly for affecting Partly for

taxable supplies
Partly for business purposes Partly for other purposes
including zero-rated affecting exempt
supplies supplies

ITC available to ITC available to the extent

the extent goods
ITC not available goods and services are used ITC not
and services are for effecting taxable supplies
used for business including zero-rated supplies
available
 Optional method for Banks
 A banking company or a financial institution including a non-banking
financial company, engaged in supplying services by way of
accepting deposits, extending loans or advances shall have the
option to either comply with the provisions of sub-section (2), or
avail of, every month, an amount equal to fifty per cent of the eligible
input tax credit on inputs, capital goods and input services in that
month. The option once exercised shall not be withdrawn during the
remaining part of the financial year.
 Blocked Credits (Exemption of Input Tax Credit)
 There are certain goods and services on which ITC is not available. Some of those are:
1. Motor vehicles and other conveyances except:
- Further supply
- Transportation of passengers
- Transportation of goods
2. Foods, Outdoor Catering, Beauty Treatment, Health Services Cosmetic, Plastic Surgery
except where an inward supply of goods or services or both of a particular category is
consumed by a registered person for making an outward taxable supply of the same
category of goods or services or both or as an element of a taxable composite or mixed
supply.
3. Membership of a Club, Health center and fitness center
4. Goods or services or both used for personal consumption
5. Goods lost
 Persons liable for GST registration [Sec 22]
 Any business involved in the supply of goods whose turnover in a financial year exceeds Rs.40 lakhs for
Normal Category states (Rs.20 lakhs for Special Category states);
 Any business involved in the supply of services whose turnover in a financial year exceeds Rs.20 lakhs for
Normal Category states (Rs.10 lakhs for Special Category states);
 Every person who is registered under an earlier law (i.e., Excise, VAT, Service Tax etc.) needs to register
under GST, too;
 When a business which is registered has been transferred to someone/demerged, the transferee shall take
registration with effect from the date of transfer;
 A person making inter-state supplies;
 Agents of a supplier;
 Those paying tax under the reverse charge mechanism;
 Input service distributor;
[Eleven States including Assam, Nagaland, Himachal Pradesh, Manipur, Meghalaya, Sikkim, Tripura, Arunachal Pradesh, Mizoram, Uttarakhand and
Telangana have been accorded the special category state status.]
 Persons not liable liable for GST registration [Sec 23]
The following persons shall not be liable to registration, namely:-
(a) any person engaged exclusively in the business of supplying
goods or services or both that are not liable to tax or
wholly exempt from tax under this Act or under the
Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out of
cultivation of land.
 Compulsory registration in certain cases [Sec 24]
(i) persons making any inter-State taxable supply;
(ii) casual taxable persons making taxable supply;
(iii) persons who are required to pay tax under reverse charge;
(iv) person who are required to pay tax under sub-section (5) of section 9;
(v) non-resident taxable persons making taxable supply;
(vi) persons who are required to deduct tax under section 51 [TDS], whether or not
separately registered under this Act;
(vii) persons who make taxable supply of goods or services or both on behalf of other
taxable persons whether as an agent or otherwise;
(viii) Input Service Distributor, whether or not separately registered under this Act;
 Compulsory registration in certain cases [Sec 24]
(ix) persons who supply goods or services or both, other than supplies specified under
sub-section (5) of section 9, through such electronic commerce operator who is required
to collect tax at source under section 52;
(x) every electronic commerce operator [who is required to collect tax at source under
section 52;]
(xi) every person supplying online information and database access or retrieval services
from a place outside India to a person in India, other than a registered person; and
(xii) such other person or class of persons as may be notified by the Government on
the recommendations of the Council.
 Procedure for registration [Sec 25]
 (1) Every person who is liable to be registered under section 22 or section 24 shall apply for registration in every
such State or Union territory in which he is so liable within thirty days from the date on which he becomes liable to
registration, in such manner and subject to such conditions as may be prescribed:
 Provided that a casual taxable person or a non-resident taxable person shall apply for registration at least five
days prior to the commencement of business:
 Provided further that a person having a unit, as defined in the Special Economic Zones Act, 2005 (28 of 2005), in a
Special Economic Zone or being a Special Economic Zone developer shall have to apply for a separate registration,
as distinct from his place of business located outside the Special Economic Zone in the same State or Union
territory.
 Explanation.-Every person who makes a supply from the territorial waters of India shall obtain registration in the
coastal State or Union territory where the nearest point of the appropriate baseline is located.
 (2) A person seeking registration under this Act shall be granted a single registration in a State or Union territory:
 Provided that a person having multiple places of business in a State or Union territory may be granted a separate
registration for each such place of business, subject to such conditions as may be prescribed.
 Procedure for registration [Sec 25]
 (3) A person, though not liable to be registered under section 22 or section 24 may get himself registered
voluntarily, and all provisions of this Act, as are applicable to a registered person, shall apply to such person.
 (4) A person who has obtained or is required to obtain more than one registration, whether in one State or Union
territory or more than one State or Union territory shall, in respect of each such registration, be treated as
distinct persons for the purposes of this Act.
 (5) Where a person who has obtained or is required to obtain registration in a State or Union territory in respect of
an establishment, has an establishment in another State or Union territory, then such establishments shall be
treated as establishments of distinct persons for the purposes of this Act.
 (6) Every person shall have a Permanent Account Number issued under the Income- tax Act, 1961 (43 of 1961) in
order to be eligible for grant of registration:
 Provided that a person required to deduct tax under section 51 may have, in lieu of a Permanent Account Number, a
Tax Deduction and Collection Account Number issued under the said Act in order to be eligible for grant of
registration.
 Procedure for registration [Sec 25]
 (6A) Every registered person shall undergo authentication, or furnish proof of possession of Aadhaar number, in
such form and manner and within such time as may be prescribed:
 Provided that if an Aadhaar number is not assigned to the registered person, such person shall be offered alternate
and viable means of identification in such manner as Government may, on the recommendations of the Council,
prescribe:
 Provided further that in case of failure to undergo authentication or furnish proof of possession of Aadhaar number
or furnish alternate and viable means of identification, registration allotted to such person shall be deemed to be
invalid and the other provisions of this Act shall apply as if such person does not have a registration.
 (6B) On and from the date of notification, every individual shall, in order to be eligible for grant of registration,
undergo authentication, or furnish proof of possession of Aadhaar number, in such manner as the Government may,
on the recommendations of the Council, specify in the said notification:
 Provided that if an Aadhaar number is not assigned to an individual, such individual shall be offered alternate and
viable means of identification in such manner as the Government may, on the recommendations of the Council,
specify in the said notification.
 Procedure for registration [Sec 25]
 (6C)On and from the date of notification, every person, other than an individual, shall, in order to be eligible for
grant of registration, undergo authentication, or furnish proof of possession of Aadhaar number of the Karta,
Managing Director, whole time Director, such number of partners, Members of Managing Committee of Association,
Board of Trustees, authorised representative, authorised signatory and such other class of persons, in such
manner, as the Government may, on the recommendations of the Council, specify in the said notification:
 Provided that where such person or class of persons have not been assigned the Aadhaar Number, such person or
class of persons shall be offered alternate and viable means of identification in such manner as the Government
may, on the recommendations of the Council, specify in the said notification.
 (6D) The provisions of sub-section (6A) or sub-section (6B) or sub-section (6C) shall not apply to such person or
class of persons or any State or Union territory or part thereof, as the Government may, on the recommendations
of the Council, specify by notification.
 Explanation. For the purposes of this section, the expression - "Aadhaar number" – shall have the same meaning as
assigned to it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits
and Services) Act, 2016 (18 of 2016).]
 Procedure for registration [Sec 25]
 (7) Notwithstanding anything contained in sub-section (6), a non-resident taxable person may be granted
registration under sub-section (1) on the basis of such other documents as may be prescribed.
 (8) Where a person who is liable to be registered under this Act fails to obtain registration, the proper
officer may, without prejudice to any action which may be taken under this Act or under any other law
for the time being in force, proceed to register such person in such manner as may be prescribed.
 (9) Notwithstanding anything contained in sub-section (1),-
 (a) any specialised agency of the United Nations Organisation or any Multilateral Financial
Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947
(46 of 1947), Consulate or Embassy of foreign countries; and
 (b) any other person or class of persons, as may be notified by the Commissioner, shall be granted
a Unique Identity Number in such manner and for such purposes, including refund of taxes on the
notified supplies of goods or services or both received by them, as may be prescribed.
 Procedure for registration [Sec 25]
(10) The registration or the Unique Identity Number shall be granted or
rejected after due verification in such manner and within such period as
may be prescribed.
(11) A certificate of registration shall be issued in such form and with
effect from such date as may be prescribed
(12) A registration or a Unique Identity Number shall be deemed to have
been granted after the expiry of the period prescribed under sub-section
(10), if no deficiency has been communicated to the applicant within that
period.
Sample GST Registration
Certificate
 Deemed registration [Sec 26]
 (1) The grant of registration or the Unique Identity Number under the State Goods
and Services Tax Act or the Union Territory Goods and Services Tax Act shall be
deemed to be a grant of registration or the Unique Identity Number under this Act
subject to the condition that the application for registration or the Unique Identity
Number has not been rejected under this Act within the time specified in sub-
section (10) of section 25.
 (2) Notwithstanding anything contained in sub-section (10) of section 25, any
rejection of application for registration or the Unique Identity Number under the
State Goods and Services Tax Act or the Union Territory Goods and Services Tax
Act shall be deemed to be a rejection of application for registration under this Act.
 Cancellation/Suspension of registration [Sec 29]
 (1) The proper officer may, either on his own motion or on an application filed by the
registered person or by his legal heirs, in case of death of such person, cancel the registration,
in such manner and within such period as may be prescribed, having regard to the circumstances
where,-
 (a) the business has been discontinued, transferred fully for any reason including death of the
proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or
 (b) there is any change in the constitution of the business; or
 (c) the taxable person is no longer liable to be registered under section 22 or section 24 or
intends to opt out of the registration voluntarily made under subsection (3) of section 25.
 Provided that during pendency of the proceedings relating to cancellation of registration
filed by the registered person, the registration may be suspended for such period and in such
manner as may be prescribed.
 Cancellation/Suspension of registration [Sec 29]
 (2) The proper officer may cancel the registration of a person from such date, including any retrospective date, as
he may deem fit, where,-
 (a) a registered person has contravened such provisions of the Act or the rules made thereunder as may be
prescribed; or
 (b) a person paying tax under section 10 has not furnished the return for a financial year beyond three months
from the due date of furnishing the said return; or
 (c) any registered person, other than a person specified in clause (b), has not furnished returns for a such
continuous tax period as may be prescribed; or
 (d) any person who has taken voluntary registration under sub-section (3) of section 25 has not commenced
business within six months from the date of registration; or
 (e) registration has been obtained by means of fraud, willful misstatement or suppression of facts.
 Provided that the proper officer shall not cancel the registration without giving the person an opportunity of being
heard.
 Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer
may suspend the registration for such period and in such manner as may be prescribed.
 Cancellation/Suspension of registration [Sec 29]
 (3) the cancellation of registration under this section shall not affect the liability of the person to
pay tax and other dues under this Act or to discharge any obligation under this Act or the rules
made thereunder for any period prior to the date of cancellation whether or not such tax and other
dues are determined before or after the date of cancellation.
 (4) The cancellation of registration under the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation of registration
under this Act.
 (5) Every registered person whose registration is cancelled shall pay an amount, by way of debit in the
electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of
inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital
goods or plant and machinery on the day immediately preceding the date of such cancellation or the
output tax payable on such goods, whichever is higher, calculated in such manner as may be
prescribed:
 Cancellation/Suspension of registration [Sec 29]
Provided that in case of capital goods or plant and machinery, the taxable
person shall pay an amount equal to the input tax credit taken on the said
capital goods or plant and machinery, reduced by such percentage points as
may be prescribed or the tax on the transaction value of such capital goods
or plant and machinery under section 15, whichever is higher.
(6) The amount payable under sub-section (5) shall be calculated in such
manner as may be prescribed
 Revocation of registration [Sec 30]
 Subject to such conditions as may be prescribed, any registered person, whose registration is
cancelled by the proper officer on his own motion, may apply to such officer for revocation of
cancellation of the registration in such manner, within such time and subject to such conditions
and restrictions, as may be prescribed.
 The proper officer may, in such manner and within such period as may be prescribed, by order,
either revoke cancellation of the registration or reject the application.
 Provided that the application for revocation of cancellation of registration shall not be rejected
unless the applicant has been given an opportunity of being heard.
 The revocation of cancellation of registration under the State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a
revocation of cancellation of registration under this Act.
 Payment of tax, interest,
penalty and other amounts
 Payment of tax, interest, penalty and other amounts [Sec 49]
 Payments made by individuals via various electronic methods (e.g., internet banking,
credit/debit cards, NEFT, RTGS) will be credited to their electronic cash ledger as per
prescribed conditions.
 The electronic cash ledger balance can be used to pay taxes, interest, penalties, fees, or
other dues as per Act rules within prescribed limits.
 The electronic credit ledger balance can be used to pay output taxes under this Act or the
Integrated Goods and Services Tax Act within prescribed limits and subject to restrictions.
 Input tax credit in the electronic credit ledger will be used as follows:
(a) Integrated tax credit used first for integrated tax, then central tax, and state/union
territory tax.
(b) Central tax credit used first for central tax, then integrated tax.
(c) State tax credit used first for state tax, and if central tax credit is unavailable for
integrated tax, state tax credit can be used.
(d) Union territory tax credit used first for union territory tax, then integrated tax.
 Payment of tax, interest, penalty and other amounts [Sec 49]
 Input tax credit in the electronic credit ledger will be used as follows:
(a) Integrated tax credit used first for integrated tax, then central tax, and
state/union territory tax.
(b) Central tax credit used first for central tax, then integrated tax.
(c) State tax credit used first for state tax, and if central tax credit is unavailable
for integrated tax, state tax credit can be used.
(d) Union territory tax credit used first for union territory tax, then integrated tax.
Provided that, Union territory tax credit can be used for integrated tax only if
central tax credit is insufficient for integrated tax payment.
(e) Central tax credit cannot be used for state tax or union territory tax payment.
(f) State tax and union territory tax credits cannot be used for central tax
payment.
 Payment of tax, interest, penalty and other amounts [Sec 49]
 The balance in the electronic cash or credit ledger can be refunded as per
Section 54.
 All liabilities are recorded in an electronic liability register.
 Every taxable person shall discharge his tax and other dues under this Act or
the rules made thereunder in the following order, namely:-
(a) self-assessed tax, and other dues related to returns of previous tax
periods;
(b) self-assessed tax, and other dues related to the return of the current
tax period;
(c) any other amount payable under this Act or the rules made thereunder
including the demand determined under section 73 or section 74.
 Payment of tax, interest, penalty and other amounts [Sec 49]
 A registered person can transfer funds from the electronic cash ledger to
other specified accounts on the common portal, subject to conditions for;
(a) integrated tax, central tax, State tax, Union territory tax or cess; or
(b) integrated tax or central tax of a distinct person as specified in sub-
section (4) or, as the case may be, sub-section (5) of section 25, in such
form and manner and subject to such conditions and restrictions as may be
prescribed and such transfer shall be deemed to be a refund from the
electronic cash ledger under this Act:
 Provided that no such transfer under clause (b) shall be allowed if the
said registered person has any unpaid liability in his electronic liability
register.
 Interest on delayed payment of tax [Sec 50]
 As according to the provisions of section 50 of the Act,
1. If a person doesn't pay their taxes within the prescribed period, they
must pay interest at a rate, not exceeding 18%, as set by the
Government on the recommendation of the Council.
2. Interest is calculated from the day after the tax was due.
3. If a person wrongly claims and uses input tax credit, they must pay
interest at a rate, not exceeding 24%, as set by the Government on the
recommendation of the Council.
4. Interest is calculated in a manner prescribed by the rules.
 Tax deduction at source [Sec 51]
 The Government can mandate certain entities, referred to as "the deductor,"
to deduct 1% tax from payments exceeding INR 2,50,000 to "the deductee"
for taxable goods or services, except when the supplier's location and place
of supply differ in states/union territories.
 The deducted tax must be paid to the Government within ten days after
each month.
 A tax deduction certificate is issued as prescribed.
 The deductee can claim credit for the deducted tax in their electronic cash
ledger, based on the deductor's return.
 If the deductor fails to pay to the government the amount deducted as tax,
he shall pay interest in accordance with the provisions of section 50.
 Collection of tax at source [Sec 52]
 Electronic commerce operators must collect a tax not exceeding 1% on the net
value of taxable supplies when they collect payment on behalf of suppliers. The
rate is determined by the Government on the Council's recommendation.
 Operators must pay the collected tax to the Government within ten days at the
end of the month in the prescribed manner.
 Operators need to provide a monthly statement of supplies and collected tax
electronically within ten days after the month ends.
 If errors are found in the statements, they can be corrected within a specific
timeframe with interest payment.
 Details of supplies by operators will be matched with supplier's details, and
discrepancies will be communicated. Unresolved discrepancies will result in
adding the liability to the supplier's output tax, with added interest
 Filing of various
returns under GST
 Filing of various returns under GST
Return Form Description Frequency Due Date

Details of outward Monthly 11th of the next month

GSTR – 1 supplies of taxable

goods and/or services Quarterly
13th of the month
affected. (If opted under the
succeeding the quarter
QRMP scheme)

Summary return of Monthly 20th of the next month.

outward supplies and
GSTR-3B input tax credit claimed, Quarterly 22nd or 24th of the
along with payment of (For taxpayers under month succeeding the
tax by the taxpayer. the QRMP scheme) quarter
 Filing of various returns under GST
Return Form Description Frequency Due Date

Return for a taxpayer registered

30th of the month
GSTR-4 under the composition scheme under Annually
succeeding a financial year.
Section 10 of the CGST Act.
20th of the next month.
Return to be filed by a non-resident (Amended to 13th by Budget
GSTR-5 taxable person.
Monthly
2022; yet to be notified by
CBIC.
Return to be filed by non-resident
GSTR-5A OIDAR [Online Information Database Access Monthly 20th of the next month.
and Retrieval services] service providers

Return for an input service

GSTR-6 distributor to distribute the eligible Monthly 13th of the next month.
input tax credit to its branches.
 Filing of various returns under GST
Return Form Description Frequency Due Date

Return to be filed by registered

GSTR-7 persons deducting tax at source Monthly 10th of the next month.
(TDS).
Return to be filed by e-commerce
operators containing details of
GSTR-8 supplies effected and the amount of
Monthly 10th of the next month.
tax collected at source by them.

31st December of the next

GSTR-9 Annual return by a regular taxpayer. Annually
financial year.

Self-certified reconciliation 31st December of the next

GSTR-9C statement.
Annually
financial year.
 Filing of various returns under GST

Return Form Description Frequency Due Date

Once, when the GST Within three months of the

Final return to be filed by a taxpayer registration is date of cancellation or date
GSTR-10 whose GST registration is cancelled. cancelled or of cancellation order,
surrendered. whichever is later.

Details of inward supplies to be 28th of the month following

GSTR-11 furnished by a person having UIN and Monthly the month for which
claiming a refund statement is filed.
Consumer Welfare
Fund
 Consumer Welfare Fund
 Consumer Welfare Fund (CWF) has been constituted under Section 57 of
the Central Goods & Service Tax (CGST) Act, 2017. The provision for
utilization of CWF has been made in Section 58 of the CGST Act, 2017
which provides that the fund shall be utilized by the Government for the
welfare of the consumers in such manner as may be prescribed.
 The overall objective of the Consumer Welfare Fund is publicity or
consumer awareness on Goods and Service Tax (GST) which may include
providing financial assistance and to implement measures to promote and
protect the welfare of the consumers of goods and services in so far,
they pay or bear the burden of GST.
 Consumer Welfare Fund
 50% of the amount credited to the Fund has been made available to the Board under rule
97(7A) of the CGST Rules, 2017 for publicity and consumer awareness on Goods & Service
Tax (GST). Accordingly, the financial assistance from the Fund would be made available for:
1. To promote and protect the welfare of GST consumers and their empowerment.
2. To incentivize consumers for exercising their rights and responsibilities under GST.
3. Innovative projects for spreading consumer literacy and awareness and programmes
for consumer education on GST.
4. Schemes and programmes for spreading awareness about the provisions of GST law
and procedures, amongst the public at large.
5. Creation of digital platforms to facilitate consumers to know their rights.
6. Projects not covered by the above, but which in the opinion of Selection Committee,
address pressing tax issues which maximize consumer welfare, or are in benefit of the
taxpayer and public at large in relation to GST. In such cases, the Committee will record
reasons in writing.
GST Audit
 GST Audit
 An audit under GST is the process
of examining a taxable person's
records, returns, and other
documentation. The goal is to
evaluate the accuracy of the
turnover declared, taxes paid,
refund claimed, and input tax
credit claimed, as well as to
examine compliance with GST
requirements.
 The GST audit can be of different
types as shown in the chart.
 GST Audit
 Threshold limit for Audit under GST:- Every GST registered taxable person whose
turnover during a financial year exceeds the prescribed limit is subject to audit. As
per the current notified GST Rules, the turnover limit is above Rs 2 crore. Such
businesses must get their books of accounts audited by a chartered accountant or
a cost accountant. Such taxpayer shall electronically file:
• An annual return using the Form GSTR 9 by 31st December of the next Financial
Year
• The audited copy of the annual accounts
• A certified reconciliation statement in the form GSTR-9C, reconciling the value
of supplies declared in the return with the audited annual financial statement
• Any other particulars as prescribed
 GST Audit
Rectifications to Returns After GST Audit:- If any taxable
person, after furnishing a GST return discovers any
omission/incorrect details (from results of audit), he can rectify
subject to payment of interest.
However, no rectification will be allowed after the earlier of:
• (i) the due date for filing of return for the month of
September or second quarter, (as the case may be), following
the end of the financial year, or
• (ii) the actual date of filing o the relevant annual return.
 GST Audit
 Audit by Tax Authorities:- The Commissioner of CGST/SGST (or any officer
authorized by him) may conduct an audit of a taxpayer.
 A notice will be sent to the auditee at least 15 days before.
 The audit will be completed within 3 months from the date of commencement
of the audit.
 The Commissioner can extend the audit period for a further six months with
reasons recorded in writing.
 Obligations of the Auditee:- The taxable person will be required to:
• provide the necessary facility to verify the books of account/other
documents as required
• to give information and assistance for timely completion of the audit.
 GST Audit
Findings of Audit:-
On conclusion of an audit, the officer will inform the taxable
person within 30 days of:
• the findings,
• their reasons, and
• the taxable person’s rights and obligations
If the audit results in the detection of unpaid/short paid tax or
wrong refund or wrong input tax credit availed, then demand and
recovery actions will be initiated.
Inspection, Search and
Seizure under GST
 Inspection under GST
 A Joint Commissioner (or an officer of higher rank) may have “reasons to believe” that in
order to evade tax, any person has done the following-
• Suppressed any transaction of supply
• Suppressed stock in hand
• Claimed input tax credit in excess
• Violated of any of the provisions
• Any transporter or owner/operator of a warehouse has kept goods that have escaped
tax payment or have kept accounts and/or goods in such a way as to evade tax
 Then he can authorize any officer in Form GST INS-01 to inspect places of businesses of:
• the taxable person or
• the transporter or
• owner/operator of warehouse.
 Search and Inspection under GST
 ‘Search’ involves an attempt to find something. Search, in tax/legal
parlance, is an action of a government official (a tax officer or a police
officer, depending on the case) to go and look through or examine carefully a
place, person, object etc. in order to find something concealed or to discover
evidence of a crime. The search can only be done under the proper and valid
authority of law.
 ‘Inspection’ is the act of examining something, often closely. In tax/legal
language, it is a softer provision than search. It enables officers to access
any place of business of a taxable person and also any place of business of a
person engaged in transporting goods or who is an owner/operator of a
warehouse or godown.
 Who can order search under GST
On the basis of results of inspection or any other reason, Joint
Commissioner of SGST/CGST or a superior officer can order for a
search if he has “reasons to believe” –
• There are goods which are liable for confiscation
• Any documents or books or other things which will be useful
during proceedings and are hidden somewhere
He can, on his own or through an authorized officer, search and
seize the goods and documents.
 Seizure under GST
The term ‘seizure’ has not been specifically defined in
GST.
In legal parlance, seizure is the act of taking over
something or someone by force through legal process,
such as the seizure of evidence found at the scene of a
crime.
It generally implies taking possession forcibly against the
wishes of the owner.
 Procedure for seizure
 The proper officer will give an order of seizure in FORM GST INS-02.
 The officer authorized to search will have the power to seal the door of the premises. He can
also break open the door of any premises if access is denied. He can also break open any
cupboard or box in which goods, books, documents etc. are suspected to be concealed.
 If it is not practicable to seize the goods, the proper officer will order the owner not to
remove these goods without prior permission of the officer. The officer will issue an order
of prohibition in FORM GST INS-03.
 The officer will keep the books and documents as long as it is necessary for examination and
inquiry.
 The seized goods can be released on a provisional basis against a bond for the value of the
goods in FORM GST INS-04. The owner must also furnish a security in the form of a bank
guarantee for the amount due (applicable tax, interest and penalty payable).
Appeal under GST
Steps of the Appeals under GST
 GST Appeal
 As per the GST Act, CGST & SGST/UTGST officers are both empowered to pass
orders.
 As per the Act, an order passed under CGST will also be deemed to apply to SGST.
 However, if an officer under CGST has passed an order, any appeal/review/
revision/rectification against the order will lie only with the officers of CGST.
 Similarly, for SGST, for any order passed by the SGST officer the
appeal/review/revision/rectification will lie with the proper officer of SGST only.
 An applicant can file an appeal before the Appellate Authority within three
months from the date of communication of the disputed order. Further, the
Appellate Authority may condone a delay of up to one month if they are satisfied
that there was a sufficient cause for such delay.
 GST Appeal
 Any person required to appear before a GST Officer/First Appellate Authority/Appellate
Tribunal can appoint an authorized representative to appear on his behalf, unless he is
required by the Act to appear personally. An authorized representative can be-
• a relative
• a regular employee
• a lawyer practising in any court in India
• any chartered accountant/cost accountant/company secretary, with a valid certificate
of practice
• a retired officer of the Tax Department of any State Government or of the Excise Dept.
whose rank was minimum Group-B gazetted officer
• any tax return preparer
 Retired officers cannot appear in place of the concerned person within one year from the
date of their retirement.
 Appealable orders
Following are the orders against which the aggrieved person may
file an appeal –
1. Enforcement Order
2. Assessment or Demand Order
3. Registration Order
4. Refund Order
5. Assessment Non-Demand Order
6. LUT Order
 Filling of GST Appeal
An appeal shall be filed in Form GST APL-01, along with relevant
documents.
As soon as appeal is filed, provisional acknowledgement will be
issued immediately.
However, the final acknowledgement, indicating the appeal
number shall be issued in Form GST APL-02, only after manual
submission of Form GST APL-01, Copy of order appealed against
as well as statement of facts and grounds of appeal within 7 days
of issuance of provisional acknowledgement.
 Filling of GST Appeal
If the aggrieved person is not satisfied with the order of
First Appellate Authority too, then he may go for an
appeal before –
(i) National Appellate Tribunal
(ii) High Court
(iii) Supreme Court
Offences and Penalties
under GST
 Offense Relevant GST Act Section Penalty/Consequences
a) Not registering under GST when required: Penalty
up to 10% of the tax amount due or INR 10,000,
1. Failure to Register Section 22, Section 24
whichever is higher. b) Failure to register despite
being liable can lead to imprisonment up to one year.
Late filing of GST returns may attract a late fee of INR
2. Late Filing of Returns Section 47 100 per day per return (CGST + SGST), up to a
maximum of INR 5,000.
Incorrect information or understatement of tax
Section 74 (Fraud), Section 122
3. Incorrect Return Filing liability can lead to penalties, including 10% of the tax
(Others)
due or INR 10,000, whichever is higher.
Failure to issue proper invoices can result in a
4. Not Issuing Proper
Section 122 (Others) penalty of INR 10,000 or the tax amount involved,
Invoices
whichever is higher.
5. Not Maintaining Proper Penalty up to INR 25,000 for not maintaining required
Section 122 (Others)
Records records.
 Offense Relevant GST Act Section Penalty/Consequences
Tax evasion or fraud can lead to penalties up to
6. Evasion of Tax Section 122 (Fraud) 100% of the tax evaded. In cases of deliberate
fraud, imprisonment can also be imposed.

7. Input Tax Credit (ITC) Section 122 (Fraud), Section 132 Wrongful availing or utilization of ITC can result
Abuse (Punishment for certain offenses) in penalties up to the amount of ITC involved.

8. Non-Compliance with GST Section 132 (Punishment for certain Non-compliance with GST orders, notices, or
Orders offenses) summons can result in penalties.

Supply without issuing an invoice or issuing a

9. Supply without Invoice Section 122 (Others)
false invoice can lead to penalties.

10. Transportation of Goods

Transporting goods without proper
without Proper Section 122 (Others)
documentation can result in penalties.
Documentation
Thank You