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CA Final · Indirect Tax Laws · Assessment and Audit

During an audit of Kaveri Agro Ltd, the proper officer notes that the company claimed input tax credit on items that appear to be ineligible. Under Rule 101, what is the correct sequence for handling this observation?

The officer informs the registered person of the discrepancies observed, the person may file a reply, and the officer then finalises the audit findings after due consideration of that reply. Findings are communicated in FORM GST ADT-02 only on conclusion of the audit.

  1. AThe officer informs the person of the discrepancies, the person may file a reply, and the officer finalises the findings after due consideration of the replyCorrect
  2. BThe officer finalises the findings in FORM GST ADT-02 first and then invites the person's reply to the discrepancies
  3. CThe officer issues FORM GST ADT-03 directing a special audit before any discrepancy is communicated
  4. DThe officer must communicate discrepancies only through FORM GST ASMT-14 and wait fifteen days

Explanation

Rule 101(4) lets the proper officer inform the person of discrepancies, the person may reply, and findings are finalised after considering the reply. ADT-02 is issued on conclusion of audit, so the second option reverses the order. ADT-03 is for special audit and ASMT-14 is for best judgment assessment.

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