Special audit by Chartered/Cost Accountant :
If at any stage of scrutiny, enquiry, 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 the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the Commissioner, direct such registered person by a communication in writing 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 – section 66(1) of CGST Act.
Section 71(2) of CGST Act makes provision for demanding and making available records for audit.
In Karnataka State Chartered Accountants Association v. State of Karnataka (2016) 135 SCL 141 = 68 taxmann.com 19 (Karn HC), provision in Karnataka Cooperative Societies Act which allowed auditing of accounts by Cost Accountant was held valid. The provision does not result in encroachment on profession of Chartered Accountants.
Audit report within 90 days with further extension of 90 days – The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit duly signed and certified by him to the said Assistant Commissioner mentioning therein such other particulars as may be specified – section 66(2) of CGST Act.
The Assistant Commissioner may, on an application made to him in this behalf by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by another ninety days – proviso to section 66(2) of CGST Act.
Special audit in addition to any other audit – The provision of special audit under section 66(1) shall have effect notwithstanding that the accounts of the registered person have been audited under any other provision of this Act or any other law for the time being in force or otherwise – section 66(3) of CGST Act.
Opportunity of hearing to taxable person – The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under section 66(1) which is proposed to be used in any proceedings under this Act or rules made thereunder – section 66(4) of CGST Act.
Expenses of special audit – The expenses of the examination and audit of records under section 66(1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final – section 66(5) of CGST Act.
Demand notice on basis of special audit report – Where the special audit conducted under section 66(1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit erroneously availed, or input tax credit wrongly availed or utilized, the proper officer may initiate action under section 73 or section 74 – section 66(6) of CGST Act.