When Special Audit may be directed and from whom?

If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that –

  1. the value has not been correctly declared; or
  2. the credit availed is not within the normal limits, 

he may, with the prior approval of the Commissioner, issue a direction to the registered person to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner and specified in the said direction. 

The provisions of the special audit shall have an effect even if the accounts of the registered person have been audited under any other provisions of the GST Act or any other law for the time being in force.

The time limit within which audit to be completed 

The Chartered Accountant or cost accountant as nominated by Commissioner shall submit a report of such audit duly signed and certified by him within the period of 90 days to the said Assistant Commissioner mentioning therein such other particulars as may be specified: 

The Assistant Commissioner may extend the said period 90 days by a further period of 90 days −

  1. on an application made to him in this behalf by the registered person or the chartered accountant or cost accountant; or 
  2. for any material and sufficient reason. 

Who will bear the expenses of the audit? 

The expenses of the examination and audit of records including the remuneration of such Chartered Accountant or Cost Accountant, shall be determined and paid by the Commissioner and such determination shall be final. 

How the Special Audit Report to be dealt with? 

The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit which is proposed to be used in any proceedings against him under this Act or the rules made thereunder. 

On the conclusion of the special audit, the registered person shall be informed of the findings of the special audit. 

Where the special audit results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilized, the process of demand and recovery will be initiated against the registered person under section 73 or section 74.

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