TaxTMI 
TaxTMI 
GST Audit and time limit
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....ST Audit and time limit<br> Query (Issue) Started By: - VENU K Dated:- 15-11-2024 Last Reply Date:- 16-11-2024 Goods and Services Tax - GST<br>Got 9 Replies<br>GST<br>I have given a reply to an audit observation in the following fashion. Please provide your opinions on the matter "The Auditee is in receipt of preliminary audit observations issued on 12/11/2014.In this matter, since the Audit had commenced on 18/12/2023 as per your letter No XXXX. The continuation of Audit beyond a period of 9 months from the date of commencement of audit is a violation of express provisions of Sec 65 (4) time limits and as such the notice dated 12/11/2014 issued by you is without jurisdiction and we request you to please drop further proceedings in this matter. Further the Auditee also requests you to provide a copy of the Specific sanction accorded by the Commissioner to continue the Audit beyond the period of three months as per Proviso to Sub Section 4 of Section 65. Without Prejudice The Auditee disputes all allegations in the notice made under serial numbers 1 to 15 as being contrary to law, existing jurisprudence as well as express provisions of the law and therefore rejects the enti....
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....re demand." Reply By VENU K: The Reply: Please read the date as 12/11/2024. Date 2014 was a typo Reply By Amit Agrawal: The Reply: In the context of the query raised, explanation given under Section 65(4) is worth noting: Explanation.--For the purposes of this sub-section, the expression "commencement of audit" shall mean the date on which the records and other documents, called for by the tax authorities, are made available by the registered person or the actual institution of audit at the place of business, whichever is later. This explanation, in my view, gives lot of leverage to Dept's audit party to counter the claims made by you about validity of audit objections. It would be better, IMHO, if you defend each & every objection with detailed reply with supporting data & documents, instead of merely challenging the validity of audit objections on time limitations. These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation. Reply By KASTURI SETHI: The Reply: Sh.Venu K Ji, You should have sought opinion before submission of the reply to the department. Now the die is cast. However, my views are ....
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....as follows :- Para No. 1 : It reminds me of William Shakespeare's famous quote, "Nothing will come of nothing". If you contest on this ground, it will be a long battle. Para No. 2 : Possible only through RTI Act. Para No. 3 : Yes, you must fight on merits. The word, 'rejects' is not appropriate here. It is not in the fitness of things. : Reply By DR.MARIAPPAN GOVINDARAJAN: The Reply: As per section 65(4) the audit shall be completed within 3 months. It can be extended a further period of 6 months on approval. There is no provision to convey the said extension to the auditee. Your objections will not hold good. Therefore you may file reply suitably to each para. Reply By KASTURI SETHI: The Reply: Sh.Venu K. Ji, Sir, Expecting your views on all the replies of the experts please.. We cannot forget that we are not "the rulers" but "the ruled.over" by Govt. of India and respective State Govt. Reply By Patri ciabin: The Reply: As per Section 65(4) of GST Act, the audit ideally has to be completed within three months from the date of the inception and can be extended for six months only if the Commissioner is satisfied that the audit c....
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....ould not be spacebar counter completed due to genuine reasons Turnover-based Audit under Section 35(5) of CGST Act. If the annual turnover of a registered taxpayer is more than. The registered person shall within a period of 30 days or further extended period as allowed by the CGST officer, shall either accept the discrepancies and pay the tax including interest and penalty or furnish an explanation for the said discrepancies in FORM ASMT 11. Reply By VENU K: The Reply: Dear Sirs, Let me thank you all for being kind enough to reply to my query and I value the expertise and good intentions of each one. I also hold the view that, LAW is capable of differing interpretations and therefore no view, including mine, becomes universal truths or sacrosanct. Whenever I plead in GST I take a very strong approach and the same has kept me in good stead. I also take a position that BEING STUPID IS NO OFFENCE IN GST. So ones pleadings do not even have to be logical. No prejudice would attach to a tax payer just because his pleadings were nonsense. Now regarding the views expressed by experts. The Section that authorizes the Proper Officer to audit accounts is Sec 65. Further Sec 65(4) has sp....
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....ecified time limits to complete the Audit. * Normal Cases: Audit SHALL be completed within a period of three months from the date of commencement of Audit * For reason to be recorded the Commissioner may extend the period by another six months Date of Commencement is : Date on which records called for by the tax authorities were made available or actual institution of audit at the place of business whichever is earlier. Sub Section 2 of Sec 65 gives power to the Officer to conduct the audit at the place of business of the registered person or in their office. (Called Desk Audit) Rule 101 Sub rule 4 says the proper officer may inform person and seek objections and shall finalise findings of the audit after due consideration of the reply Rule 101 Sub rule 5 says : On conclusion of audit the officer would inform findings. In this particular case the time lines were 1.ADT 01 18/12/2023 demanded attendance on 09/01/2024 and production of documents which we did. 2. ADT 01 also said "I propose to conduct audit at my Office on 09/01/2024 Further no requests were made for production of books or records, no deficiency notice were issued. A number of Audit memos were issued seekin....
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....g clarification about accounting entries in books etc right from 15th of January 2024. Now there is positive evidence to the fact that audit was commenced at least from 15th January 2024. 3. Observations under Rule 101(4) issued on 14.11.2024 My Reasons and Logic for objections Part III of Constitution of India Fundamental Rights Article 21. Protection of life and personal liberty.--No person shall be deprived of his life or personal liberty except according to procedure established by law. Personal liberty includes the freedom to move freely, the freedom to choose one's place of residence, and the freedom to engage in any lawful occupation or profession Article 265. Taxes not to be imposed save by authority of law.--No tax shall be levied or collected except by authority of law. Authority of Law or jurisdiction is obtained only when procedure established by law is followed. India is a country which has adopted Rule of Law by its constitution. A person's life or personal liberties can be deprived by the State and its instrumentalities only by following Procedure Established by law. Ditto in case of imposing taxes. Any deviation from procedure established by law become....
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....s anti-constitutional and as such void ab initio. And it is the right of every citizen to demand that procedure established by law be followed in proceedings that are designed to deprive him of his personal liberty. Further in Maneka Gandhi Vs Union of India - 1978 (1) TMI 161 - SUPREME COURT case the Supreme Court had clearly laid down that procedure established by law should invariably follow principles of natural justice. The intention of Parliament in laying down such strict conditions on the length of audit is not accidental. The legislature was very conscious of the disruption a department audit at a business premises would entail. That was the reason the Commissioner was made the proper officer to apply his mind and give extension to the time limit for conclusion of audit. Please note that an inspection, search or seizure can be authorised by the Joint Commissioner but extension of audit could be done only by a commissioner. From this, the legislative intent to conclude audit urgently is evident. Now, regarding whether there is provision in GST law to provide certain documents. When deviation from procedure of law is alleged by the tax payer, the department is bound to ad....
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....dress such objections through a speaking order Rule 101(4). Requesting copies of relied upon documents, asking for cross examination of witnesses etc are not done on the basis of a particular section in GST but on the basis of the existing jurisprudence as well as principles of natural justice. Violation of principles of natural justice is a violation of Article 21 of the constitution so is any deviation from procedure established by law. The tax payer is free to even approach the High Court directly if there is a violation of principles of natural justice or other constitutional provisions. So when there is an objection to deviation from due process by the tax payer the Officer is bound to address it in his order with reasons. Whether the Officer provides a copy or not is not material. Refusal to do so would be at the peril of the demand at Appellate forums. Any way we shall apply and obtain it through RTI. In any kind of SCN there will be certain allegations with supporting evidences to prove the allegations and a consequential demand if the allegations were proved. Allegations : Allegations have to be disputed with valid grounds, reasons, evidence etc. They cannot be rejected....
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..... Demands: They have to be either Accepted or Rejected to have clarity. Disputing a demand does not have any clarity. Politeness in written communications is different from leaving it ambiguous. It is a cultural aspect to suffer from an urge to leave communication confusing, especially when providing a response of disagreement and refusal. Tax payer's reply must be clear and unambiguous about the position of either party so that proceedings can progress with clarity. After all adjudication, is not the last step, in fact, it is the first step in the long process until the resolution of the lis or dispute. Regarding RULERS and RULED OVERS suffice to say that Rule of law mandates that THE COUNTRY SHOULD BE RULED BY RULES AND NOT BY RULERS. Any deviation from due process by the state and its instrumentalities is a violation of fundamental rights as guaranteed by constitution. It needs to be questioned. The proper officer inventing a new due process is trying to legislate on his own. Such an eventuality cannot be allowed. If we do it, ultimately the country itself will fall into lawlessness. Reply By Amit Agrawal: The Reply: Dear Shri VENU K Ji, Even though I do not agree with ....
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....your legal contentions in given circumstances & legal issue involved here, I enjoyed reading post passionately defending your client's position considering prolonged audit period. What I most liked most (& which made me smile) is your following sentences: 1. BEING STUPID IS NO OFFENCE IN GST 2. THE COUNTRY SHOULD BE RULED BY RULES AND NOT BY RULERS. On broader terms, I agree with you that tax-payer & consultants should not be afraid using Dept's officer's lapses / delays / mistakes to advantages of the tax-payer. It is duty to do so for any professional expert defending his client, IMHO. Check & balances put in the system / law (For example: Time-limits to issue SCN, all correspondences from Central tax Dept. should have DIN) is designed for this purpose only. W.r.t. legal issue raised by you, you have mentioned in your last post that 'A number of Audit memos were issued seeking clarification about accounting entries in books etc right from 15th of January 2024.'. INHO, your stand about validity due to delay in conclusion of audit proceedings will be seriously challenged by Revenue using these audit memos read with 'explanation' given u/s 65(4). B....
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....ut & again in my humble view, IF these is gap of more than 3 months from submission of last replied memo by the tax-payer and 'Observations under Rule 101(4) issued on 14.11.2024', you got a better case to defend your argument. These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation. Reply By Amit Agrawal: The Reply: Dear Shri VENU K Ji, I also agree with your views that 'Politeness in written communications is different from leaving it ambiguous. It is a cultural aspect to suffer from an urge to leave communication confusing, especially when providing a response of disagreement and refusal.' And, IMHO, this also applies for any professionals giving their views on public forum such as TMI. In my humble view, giving open-ended / vague reasoning etc. to take a particular view or to counter other's view does not help anyone including the querist/s as well as general public / tax-payers (who are not the expert on these fields) visiting these websites. I also believe that 'Politeness in written communications' can be very subjective in may situations and may defer from person to person.....
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.... Sometimes, just because one does not agree with other's view may find other person as non-polite. Just an example: Someone might find something from your last post above as non-polite, but I do not feel that way. This happen more when the other person is giving solid legal reasoning to back his views and others are finding it difficult to argue with his reasoning etc. So, generally specking, I just focus on legal issues in given set of facts and give my views thereon (i.e. while handling professional work assignment as well as while posting my views on public forum like TMI) and does not deal with open-ended / vague reasoning etc. of others to take a particular view specially on public forum. I also strongly believe that neither Govt. of the day nor bureaucrats / Dept. officers are RULERS of our Great Country. Though few bureaucrats / Dept. officers feels & act like they are 'rulers' and also feels that tax-payers are at their mercy (but NOT all officers, as I found so many officers are very good & relatively non-partisan while performing their professional duties), I have never treated any officer as 'rulers'. I always see them as only as "public serv....
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....ants" who has to act within four concerns of law & there is elaborate judicial machinery where tax-payer can challenge orders from bureaucrats / Dept. officers. Needless to say, I respect everyone of them as part of professional courtesy & basic human values. I also never shy way from taking every good legal arguments to defend my clients in given situations & I do not mind if any officer does not like any of my arguments. And I feel that this approach of mine has contributed very well in my professional success over last 24 years & counting. Such approach immensely helps when a case reach tribunal and above level. And majority of Dept. cases reaches tribunal and above level anyway (& where Dept. losses majority of its cases). These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation.<br> Discussion Forum - Knowledge Sharing ....