Departmental Auditor would be looking forward to these points while doing audit (Happy GST series – 35) by CA Rajender Arora
Departmental Auditor would be looking forward to Rate of Tax, Classification of Supplies, Value
and Place of Supply, Anti-Profiteering Rules, Return Scrutiny and OTHER CHECKS while doing
audit.
IV. Applicability of correct rate of tax
i. In light of many frequent changes in rates of various goods and services, the correct
application of rate of tax needs to be verified.
ii. This has also become important in the light of anti-profiteering measures.
V. Applicability of correct classification of supplies
a. Check Whether HSN of the supply and minor code mentioned in GSTPMT-06 Challan is
appropriate?
b. Check Important contracts, invoices, purchase orders issued by the clients
c. Exempted supplies – Check eligibility to Notifications and other Relevant notifications,
Relevant contracts, invoices, purchase orders issued by the clients
d. Non Taxable Supplies - Relevant notifications, Relevant contracts, invoices, purchase
orders issued by the clients
e. Any receipts claimed as not a “supply” at all?
Relevant invoices, purchase orders placed by the client, JVs
f. Nature of supply is to be ascertained as mixed supply/composite supplies if any.
VI. Application of correct valuation, place of Supply rules and Point of Taxation rules
a. VALUATION
i. Whether “Time of supply of goods” was properly determined in terms of Section
12 (2) of CGST Act while discharging the tax payable.
ii. Whether time of supply of goods was properly determined in terms of Section
12(3) of CGST Act in case of payment under reverse charge and tax liability was
discharged properly.
iii. Check whether the discounts allowed are in accordance with regular practice of
the dealer and the purchaser has paid the sum originally charged less the
discount.
iv. Check whether any amount, that the supplier is liable to pay but incurred by the
purchaser has been included in the value of supply
v. Check whether interest or late fee or penalty for delayed payment of any
consideration for any supply collected from the purchaser is included in the value
of supply
vi. Check whether there are supporting documents for the credit notes issued for the
sales made
vii. Check whether there are supporting documents for the debit notes issued for the
sales made
viii. To check the time of supply of goods in cases where there is change in rate of
tax U/s 14 of CGST Act.
ix. Whether the time of supply in case of Composite and Mixed Supply has been
correctly made as per Section 8 of the CGST Act.
x. Check whether transactions have been made between related persons. If so,
check whether there is significant variation in the value in comparison to similar
transactions with unrelated buyers. If there is significant variation in the value of
goods or services, market value of the goods/services should be taken by
rejecting the value disclosed between the related persons.
xi. Whether the value has been made in accordance with the Valuation Rules from
Rule 27 to 35 of the CGST Rules 2017.
N.B. - Debit Note and Credit Note should have direct link to a transaction having
implication on tax liability. Debit Note and
Credit Note if not linked to implication of tax liability should be ignored.
b. PLACE OF SUPPLY
i. In respect of interstate supplies & Imports, check whether place of supply of
goods has been properly determined in terms of Section 10 & 11 of IGST Act and
IGST has been paid accordingly
ii. To check whether place of supply of services has been properly determined in
terms of Section 12 of IGST Act and IGST has been paid accordingly.
VII. Anti-Profiteering rules
Anti-profiteering means there should not be unjust enrichment and the rate of reduction of
duty on any goods/services/supplies must reach the common man and the ultimate
consumer.
Application of correct value of supply in the cases where The Taxpayer has supplied goods
on which there has been reduction in rate of duty, in order to examine the possibility of
profiteering under Section 171 of the CGST Act, 2017
VIII. Scrutiny of returns
a. Time of filling and payment
Check whether the taxpayer is filing returns within the time prescribed in Section 39
of CGST Act.
It is to be verified for interest payment under section 50 of the cgst act 2017 and due
penalty under other provisions of the act. However, while doing the same the waiver
of penalty notifications for specific periods to be kept in mind.
b. Reconciliation of returns with E way bills and Financial statements
i. Check the outward supplies made from GSTR-1 and compare it with the outward
supply/sales account maintained. It is also to be compared with E-Way bills data.
However there may be differences for genuine reasons between
GSTR1/GSTR3B and E-way bills data. Those genuine reasons need to be
analysed as per the facts and circumstances of each specific case.
ii. Check whether claim under nil rated, exempted and non GST outward supplies
shown in GSTR-1 & GSTR 3B is proper.
iii. Check whether proper rate of tax was applied to outward supplies shown in
GSTR-1& GSTR 3B
iv. Identify Zero rated supplies from the GSTR -1 & GSTR 3B and compare it with
the records maintained by the trader.
v. Check the total taxable supplies from GSTR-1 & GSTR 3B and compare it with
the sales account maintained to identify any suppression of sales.
vi. Cross-check the GSTR 1with GSTR 3B of the corresponding month Vis-a-vis E-
way bills.
vii. Total taxable turnover as per GST Return vis-à-vis turnover as per financial
accounts.
viii. Random check of vehicle numbers given in E way bills from Vahan portal for kind
of vehicles used in transportation of goods.
IX. OTHER CHECKS
i. Ratio of net purchases to Net Sales (Net Purchase = O.B. + Purchases - C.B.)
ii. Value addition percentage vis-à-vis cash payment of GST to total liability
iii. Any other registrant in the name of family member just on paper.
iv. Turnover before GST introduction to check suppression in value.
v. Reverse charge liability is to be verified in the light of changes and relevant
notifications in this respect.
Source: Handbook for Departmental Officers Audit/Scrutiny in GST Era by Radhe Krishna IRS
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