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CA Final · Indirect Tax Laws · Assessment and Audit

M/s Kaveri Traders, Chennai, has been selected for audit by the proper officer under section 65 of the CGST Act. The officer proposes to audit the period from 1 October 2023 to 31 March 2024 (part of a financial year). As per the CGST Rules, 2017, which statement about the audit period is correct?

The audit period may be a financial year, a part of a financial year, or multiples of a financial year. Rule 101(1) of the CGST Rules, as amended, expressly allows part periods, so the officer's proposal to audit October 2023 to March 2024 is valid and does not need to cover a full year.

  1. AThe audit period can only be one full financial year or multiples thereof; part periods are not allowed
  2. BThe audit period may be a financial year or part thereof or multiples thereof, so the proposed period is permissibleCorrect
  3. CThe audit period must be a calendar quarter or multiples thereof
  4. DThe audit period can be decided only by the registered person in his reply to the notice

Explanation

Rule 101(1) provides that the period of audit shall be a financial year or part thereof or multiples thereof (the words 'or part thereof' were inserted in 2018). A six-month period within a financial year is therefore valid. The option limiting audit to full years reflects the pre-amendment position and is wrong.

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