CGST Rules: Chapter 11 – Assessment and Audit under GST Compliance

Understanding the intricacies of the Central Goods and Services Tax (CGST) Rules is crucial for businesses to ensure seamless compliance.

Chapter 11 of the CGST Rules specifically deals with Assessment and Audit under GST Rules, laying down the procedures and guidelines for various types of assessments and the audit process conducted by tax authorities.

DisyTax brings you a detailed breakdown of CGST Rules Chapter 11, helping you navigate these essential provisions for effective GST management.

Please remember to consult the official GST portal and CBIC website for the actual latest notifications, circulars, and amendments.

Chapter 11 of the CGST Rules, spanning from Rule 98 to Rule 102, outlines the detailed procedures for Provisional Assessment, Assessment of Unregistered Persons, Summary Assessment, Audit, and Special Audit under the GST regime.

These rules provide the framework for how tax authorities ascertain the correct tax liability and ensure compliance among registered taxpayers.

Rule 98 of the CGST Rules specifies the procedure for seeking and conducting provisional assessment under GST.

Provisional assessment, as detailed in this rule, is for situations where a taxpayer cannot determine the value of goods or the applicable tax rate.

Application for Provisional Assessment (FORM GST ASMT-01): A registered person needing provisional assessment must apply in FORM GST ASMT-01 to their jurisdictional tax officer, clearly stating the reasons for their inability to determine the value or tax rate.

Key Takeaway: Taxpayers facing genuine difficulty in valuation or rate determination can formally request provisional assessment.

Order Allowing Provisional Assessment (FORM GST ASMT-02): If the tax officer finds the application suitable, they will issue an order in FORM GST ASMT-02, allowing provisional tax payment based on a value or rate estimated by the officer.

Key Takeaway: The tax officer has the discretion to approve provisional assessment based on the merits of the application.

Execution of Bond (FORM GST ASMT-03): The applicant must execute a bond in FORM GST ASMT-03 with a security, the amount of which will be determined by the tax officer but cannot exceed twenty-five percent of the estimated tax liability.

This ensures payment of any difference upon final assessment.

Practical Implication: Taxpayers opting for provisional assessment need to provide a financial guarantee for the potential differential tax.

Final Assessment Order (FORM GST ASMT-04): The tax officer must pass the final assessment order in FORM GST ASMT-04 within six months from the date of the provisional assessment order.

This period can be extended under specific circumstances.

Key Takeaway: Provisional assessment is a temporary measure leading to a final determination of tax liability within a defined timeframe.

Rule 99 outlines the process for assessing the tax liability of individuals or entities who are liable for GST registration but haven’t obtained it, or whose registration has been cancelled but still owe tax.

Issuance of Notice (FORM GST ASMT-05): The tax officer will issue a show cause notice in FORM GST ASMT-05 to the unregistered person, demanding an explanation within fifteen days as to why their tax liability shouldn’t be assessed.

Key Takeaway: Unregistered persons liable for GST will receive a formal notice before assessment.

Passing of Assessment Order (FORM GST ASMT-06): After considering the response (or lack thereof), the tax officer will assess the tax liability to the best of their judgment and issue an order in FORM GST ASMT-06, detailing the tax and other dues payable.

Practical Implication: Failure to register despite liability can lead to assessment by tax authorities based on available information.

Rule 100 provides the guidelines for summary assessment, which is invoked when there’s a risk that delaying the assessment could negatively impact revenue.

Circumstances for Summary Assessment: If a proper officer believes that any delay in assessing a person’s tax liability might harm revenue, they can proceed with a summary assessment after obtaining permission from the Additional Commissioner or Joint Commissioner.

Key Takeaway: Summary assessment is an urgent measure to protect government revenue.

Order for Summary Assessment (FORM GST ASMT-07): The proper officer will issue a summary assessment order in FORM GST ASMT-07, specifying the tax and other payable dues.

Practical Implication: This allows for swift action in cases of potential revenue loss.

Withdrawal of Summary Assessment Order (FORM GST ASMT-08 & FORM GST ASMT-09): The person assessed can apply for withdrawal of the summary assessment order in FORM GST ASMT-08 within thirty days of receiving it.

If the Additional Commissioner or Joint Commissioner is satisfied that the conditions for summary assessment no longer exist, they can withdraw the order by issuing an order in FORM GST ASMT-09.

Key Takeaway: There is a provision for review and potential withdrawal of a summary assessment order under certain conditions.

Rule 101 outlines the procedure for the audit of registered persons as per Section 65 of the CGST Act.

Selection for Audit: The Commissioner or an authorized officer can decide to audit any registered person.

Key Takeaway: Selection for audit is at the discretion of the tax authorities.

Conduct of Audit (FORM GST ADT-01 & FORM GST ADT-02): Tax authorities will issue a notice in FORM GST ADT-01 at least fifteen working days before the audit, which can be conducted at the taxpayer’s business premises or the tax office.

If any discrepancies are found, the tax officer will inform the person in FORM GST ADT-02.

Practical Implication: Taxpayers will receive advance notice of an audit and be informed of any initial findings.

Completion of Audit: The audit must be completed within three months from the commencement date, extendable by the Commissioner for up to six more months.

Key Takeaway: GST audits have defined timelines for completion.

Rule 102 details the provisions for special audit under Section 66 of the CGST Act, which may be directed when a regular audit is insufficient or in cases of suspected tax evasion.

Direction for Special Audit (FORM GST ADT-03): An Assistant Commissioner or higher-ranking officer can direct a registered person to have their records audited by a chartered accountant or cost accountant nominated by the Commissioner, after obtaining the Commissioner’s approval.

This direction is issued in FORM GST ADT-03.

Key Takeaway: Special audits are initiated under specific circumstances with approval from higher authorities.

Appointment of Auditor: The Commissioner will nominate the chartered accountant or cost accountant to conduct the special audit.

Report of Special Audit: The nominated auditor must submit their report within ninety days, which can be extended by the Assistant Commissioner with the Commissioner’s approval for a further ninety days.

The expenses of this special audit are borne by the Commissioner.

Practical Implication: In a special audit, the government bears the cost of the audit conducted by a nominated professional.

A strong understanding of Chapter 11 of the CGST Rules is vital for all GST-registered businesses.

It provides clarity on the procedures followed by tax authorities during assessment and audit, enabling taxpayers to be well-prepared, understand their rights and obligations, and ensure smoother compliance.

Navigating the intricacies of GST assessment and audit can be complex.

DisyTax offers expert assistance to help your business stay compliant:

• Guidance on Provisional Assessment: We can help you prepare and file your application for provisional assessment and navigate the subsequent procedures.

• Support for Assessment of Unregistered Persons: If you are an unregistered person facing assessment, we can provide guidance on responding to notices and understanding your liabilities.

• Assistance with Summary Assessment Matters: We can help you understand the implications of a summary assessment order and assist in filing for its withdrawal if applicable.

• Audit Preparation and Support: DisyTax can help you prepare for GST audits by reviewing your records and ensuring compliance. We can also provide representation during the audit process.

• Special Audit Assistance: If your business is directed for a special audit, we can guide you through the process and help in coordinating with the nominated auditor.

Chapter 11 of the CGST Rules lays the groundwork for assessment and audit under GST.

By understanding these rules and their implications, businesses can ensure they are well-equipped to handle any scrutiny from the tax authorities and maintain a high level of compliance.

DisyTax is your reliable partner in navigating these complex regulations and ensuring your GST compliance journey is efficient and stress-free.

For the most accurate and up-to-date information, always refer to the official GST portal: https://www.gst.gov.in/ and the CGST Rules.