Skip to content

CA Final · Indirect Tax Laws · Assessment and Audit

The proper officer decides to audit Kaveri Components Ltd under section 65. During the audit, the team notes that the rate of tax applied on certain supplies appears incorrect and that input tax credit availed seems excessive. Under the CGST Rules, 2017, what should the proper officer do next as per the procedure?

The officer should inform Kaveri Components of the discrepancies observed, let it file a reply, and then finalise the audit findings after due consideration of that reply. The findings are communicated in FORM GST ADT-02 only on conclusion of the audit, under rule 101.

  1. AImmediately issue the final findings in FORM GST ADT-02 without hearing the registered person
  2. BInform the registered person of the discrepancies noticed, allow a reply, and finalise the findings after considering the replyCorrect
  3. CIssue a direction in FORM GST ADT-03 for a special audit by a chartered accountant
  4. DIssue an assessment order in FORM GST ASMT-13

Explanation

Rule 101(4) says the officer may inform the person of discrepancies, the person may reply, and the officer finalises findings after considering the reply. Only on conclusion are findings communicated in ADT-02. Issuing ADT-02 without the reply step skips the procedure.

Did you get it right without looking?

One question tells you little. A timed set on Assessment and Audit shows your real accuracy, how long you take and where you lose marks.

Practise Assessment and AuditFree diagnostic mock

More Assessment and Audit questions