The GST Audit Conundrum

By Krupa Venkatesh, Partner & Chief Catalyst and Akshay Jain, Associate Director, Tax & Technology, Consark Advisory Services LLP

Since the day of its inception, industry has been representing that GST audit is an arduous compliance, mainly for reasons such as its format, data information request and the complexity involved. The Union Budget 2021 in an “Ease of Doing Business” measure, proposed doing away with the annual reconciliation exercise and relying on the self-certifications by the taxpayer himself. 

It is likely that the GST annual form GSTR-9 and GSTR-9C, may get merged into a single reconciliation form, which is probably the only data point that the revenue needs.  The annual return itself is redundant, being simply an abstract of all returns filed, which data is already in possession of the Government. Short/non-payment of GST which would have come to light via the audit by a professional will now either have to be a self-discovery and correction by the taxpayer, or will have to be a scrutiny by departmental officers. 

While we stand at the cusp of another due date for FY 2019-2020 for filing GSTR-9 and GSTR-9C, i.e., 28/02/2021, the question that has arisen : is this audit applicable for FY 2019-20, and if yes, does it defeat the purpose or intention of the proposed amendment?

If one were to look at the legal position, it does appear that the audit for 2019-20 should be conducted by professionals since Sections 35 and 44 continue to be currently in force. In this reference the Central Board of Indirect Tax and Customs (CBIC) clarified, in its twitter handle, that the Goods and Service Tax (GST) Audit will be applicable for Financial Year 2019-20, “Please note Section 35 and 44 of CGST Act are proposed to be amended in Finance Bill 2021. However, these proposals will come into effect from a date to be notified later. For FY 2019-20, the existing provisions shall continue.” 

The following table has the due dates as extended for the last three years:

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One can see that the extension of deadlines for filing GST audit has been granted many times in the past as well, for various reasons. Evidently, the purpose for which it was introduced can well be served through the alternate mechanism of self-certification, which is why it has been scrapped in the first place. If, indeed, it is the intention of the Government to give effect to a provision that has been unequivocally welcomed by industry, all that is required to be done is to extend the date of filing of GSTR 9/9C for to, say 1st June 2021, by which time the passage of Finance Bill, assent by President is normally completed, going by the experience of previous years. Once the relevant provisions are taken off the statute by giving effect to the amendment, then the question of GST audit for 19-20 will not arise.