GST Audit & Assessment Support

What is a GST audit?

A GST audit is an examination of a taxpayer's records, books of accounts, and other documents to verify the correctness of tax paid, refund claimed, and ITC availed. There are three types: (1) GSTR-9C self-certification (for turnover > ₹5 crore — an annual exercise); (2) Departmental audit u/s 65 (conducted by GST officer at taxpayer's premises — 3 months notice, extendable by 6 months); (3) Special audit u/s 66 (directed by Commissioner to a CA/CMA — when books are complex or special expertise needed). Additionally, the department conducts scrutiny of returns u/s 61 (online — no physical audit).

What is a Show Cause Notice (SCN) in GST?

A Show Cause Notice (SCN) is a formal notice from the GST department requiring you to explain why a specific tax demand, penalty, or adverse order should not be confirmed against you. SCNs are issued under Section 73 (non-fraud cases) or Section 74 (fraud/wilful misstatement cases). Section 73 SCN: demand + 10% penalty if confirmed. Section 74 SCN: demand + 100% penalty for deliberate evasion. Response time: 30 days. A well-drafted SCN reply can reduce or eliminate the demand.

What is the time limit for issuing a GST demand notice?

Section 73 (normal cases): demand notice must be issued within 3 years from the due date of annual return. Section 74 (fraud): 5 years. These time limits prevent perpetual harassment from GST demands for old periods. However, if the annual return (GSTR-9) was not filed, the 3-year clock may not start — making timely GSTR-9 filing important for limitation protection.

Can I settle a GST demand without attending a hearing?

Yes. Under Section 73 GST, if you pay the tax + interest before or within 30 days of SCN issuance, the penalty is reduced to NIL. If paid within 30 days of the demand order: penalty is 25% of the demand. This makes early settlement financially attractive. However, settling without examining the demand's validity may mean paying more than required. Our CA analyses the demand before advising settlement vs contestation.

What is the GST appeals process if I disagree with a demand order?

First appeal: Appellate Authority (Commissioner-Appeals) — file GST APL-01 within 3 months of order with 10% pre-deposit of disputed amount. Second appeal: GST Appellate Tribunal (GSTAT — now being constituted) — within 3 months of Commissioner-Appeals order. Third level: High Court (substantial question of law). Fourth level: Supreme Court. We assist at all levels from first appeal through High Court.

What common issues trigger GST audits?

Common triggers for GST audit/scrutiny: (a) Large variance between GSTR-1 and GSTR-3B (turnover mismatch); (b) High ITC claim relative to tax paid (ITC ratio > industry norm); (c) Significant excess ITC in GSTR-3B vs GSTR-2B; (d) Zero or low-rate supplies claimed disproportionately; (e) Export refund claims; (f) Previous year defaults; (g) Cash credit or bank deposits not corroborating turnover; (h) Anonymous complaints or intelligence inputs.