Special Audit Section 66 (Happy GST series – 28) by CA Rajender Arora
Special Audit under section 66 of CGST Act, 2017 read with rule 102 of CGST Rules,
2017, Power to summon person to give evidence and produce documents under section
70 of CGST Act 2017 & Access to business premises under section 71 of CGST Act
2017.
1. In what circumstances, Special Audit shall be conducted and who has the power to
direct the same?
As per Sub Section 1 of Section 66 of CGST Act, 2017, If at any stage of scrutiny,
inquiry, investigation or any other proceedings before him, 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, he may, with the prior
approval of the Commissioner, direct such registered person by a communication in
writing to get his records including books of account examined and audited.
As per Sub Rule 1 of Rule 102 of CGST Rules, 2017, 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.
2. Who will conduct the special audit?
As per Sub Section 1 of Section 66 of CGST Act, 2017, a chartered accountant or a
cost accountant as may be nominated by the Commissioner.
3. What is the time limit for completion of audit?
As per Sub Section 2 of Section 66 of CGST Act, 2017, the chartered accountant or
cost accountant so nominated shall, within the period of ninety days, submit a
report of such audit duly signed and certified by him to the said Assistant
Commissioner mentioning therein such other particulars as may be specified:
Provided that the Assistant Commissioner may, on an application made to him in this
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.
As per Sub Rule 2 of Rule 102 of CGST Rules, 2017, on conclusion of the special
audit, the registered person shall be informed of the findings of the special audit in
FORM GST ADT-04.
4. Whether special audit be conducted even after any other audit?
Yes. As per Sub Section 3 of Section 66 of CGST Act, 2017, the provisions of sub-
section (1) shall have effect notwithstanding that the accounts of the registered
person have been audited under any other provisions of this Act or any other law for
the time being in force.
5. Whether opportunity of being heard shall be given to taxpayer by the officer in
special audit?
Yes. As per Sub Section 4 of Section 66 of CGST Act, 2017, 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.
6. Who will determine and pay the expenses of special audit?
As per Sub Section 5 of Section 66 of CGST Act, 2017, the expenses of the
examination and audit of records under sub-section (1), including the remuneration of
such chartered accountant or cost accountant, shall be determined and paid by the
Commissioner and such determination shall be final.
7. When can section 73 or 74 be initiated?
As per Sub Section 6 of Section 66 of CGST Act, 2017, where the special audit
conducted under sub-section (1) results in detection of tax not paid or short paid or
erroneously refunded, or input tax credit wrongly availed or utilized, the proper officer
may initiate action under section 73 or section 74.
8. Whether summons u/s 70 can be issued to give evidence or to produce a document
or any other thing, in case of proceeding under section 66 of CGST Act, 2017?
As per Section 70 of CGST Act, 2017:-
(1).The proper officer under this Act shall have power to summon any person
whose attendance he considers necessary either to give evidence or to produce a
document or any other thing in any inquiry in the same manner, as provided in
the case of a civil court under the provisions of the Code of Civil Procedure,
1908.
(2).Every such inquiry referred to in sub-section (1) shall be deemed to be a
“judicial proceedings” within the meaning of section 193 and section 228 of the
Indian Penal Code.
By applying interpretation of Statues, Summons are said to be the last resort. It is
clearly mentioned that Proper officer under this Act shall have power to summon.
Meaning thereby, Proper officer u/s 66 shall have the power to summon.
9. In what circumstances and who can have access to business premises?
As per Sub Section 1 of Section 71 of CGST Act, 2017, any officer under this Act,
authorized by the proper officer not below the rank of Joint Commissioner, shall
have access to any place of business of a registered person to inspect books of
account, documents, computers, computer programs, computer software whether
installed in a computer or otherwise and such other things as he may require and
which may be available at such place, for the purposes of carrying out any audit,
scrutiny, verification and checks as may be necessary to safeguard the interest of
revenue.
As per Sub Section 2 of Section 71 of CGST Act, 2017, every person in charge of place
referred to in sub-section (1) shall, on demand, make available to the officer
authorized under sub-section (1) or the audit party deputed by the proper officer or a
cost accountant or chartered accountant nominated under section 66—
i. Such records as prepared or maintained by the registered person and declared
to the proper officer in such manner as may be prescribed;
ii. Trial balance or its equivalent;
iii. Statements of annual financial accounts, duly audited, wherever required;
iv. cost audit report, if any, under section 148 of the Companies Act, 2013;
v. The income-tax audit report, if any, under section 44AB of the Income-tax Act,
1961; and
vi. any other relevant record,
for the scrutiny by the officer or audit party or the chartered accountant or cost
accountant within a period not exceeding fifteen working days from the day when such
demand is made, or such further period as may be allowed by the said officer or the
audit party or the chartered accountant or cost accountant.
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