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CA Final · Indirect Tax Laws · Assessment and Audit

Mehta Polymers Pvt Ltd, Surat, is selected for audit under section 65 of the CGST Act. The proper officer wants to audit the records for April 2023 to September 2023 only, i.e. part of a financial year. Which statement is correct as per the CGST Rules, 2017, as given?

The audit period under section 65 can be a financial year or part thereof, or multiples thereof. The words 'or part thereof' were inserted in rule 101(1), so auditing April to September 2023 alone is permissible. A full-year-only requirement is therefore incorrect.

  1. AThe audit period must be a full financial year or multiples thereof; a part-year audit is not permitted
  2. BThe audit period can be a financial year or part thereof, or multiples thereofCorrect
  3. CThe audit period can only be a quarter or multiples of a quarter
  4. DThe audit period must be a calendar year or multiples thereof

Explanation

Rule 101(1) states that the period of audit shall be a financial year or part thereof or multiples thereof. The words 'or part thereof' were inserted by Notification No. 74/2018-CT. Hence a six-month audit period is valid. The option demanding a full financial year ignores this insertion.

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