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CA Final · Indirect Tax Laws · Assessment and Audit

During a GST audit of Kaveri Textiles Ltd, the proper officer notes that the rate of tax applied on certain supplies appears wrong and ITC availed seems excessive. As per rule 101, what should the officer do next before finalising the audit findings?

The officer should inform the registered person of the discrepancies noticed, let the person file a reply, and then finalise the audit findings after considering that reply. Form GST ADT-02 is used only on conclusion to communicate the findings. Special audit and best judgment assessment are separate processes.

  1. ADirectly issue FORM GST ADT-02 without informing the registered person of the discrepancies
  2. BIssue FORM GST ADT-03 directing a special audit by a chartered accountant
  3. CInform the registered person of the discrepancies, allow a reply, and finalise findings after considering itCorrect
  4. DIssue FORM GST ASMT-14 proposing best judgment assessment

Explanation

Rule 101(4) says the proper officer may inform the registered person of discrepancies noticed, the person may file a reply, and the officer finalises findings after due consideration of the reply. ADT-02 communicates findings only on conclusion of the audit. ADT-03 relates to special audit under section 66, a different process.

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