Companies Get GST Audit Notices from Various States

Every State has issued a different notice, requiring tons of information

Multinational companies have started getting notices from State GST Authorities, even as the Centre is talking about lowering compliance burden.

These notices are for initiating department driven audits wherein team of officers would undertake comprehensive verification of details and records being maintained by a tax payer. These notices are relayed with conducting audit for FY 2017-18.

“Different states are issuing multiple types of notices with no uniformity and consistency in the information sought from the taxpayers,” an industry executive said.

Another executive said while vide such notices, regular details such as GST returns, financial statements, income tax returns, and cost audit reports are being called, the authorities are also seeking certain details which appear to be extraneous such as walk-through of internal controls for accounting, purchases, outward supplies, and stock.

Meanwhile, a senior Finance Ministry official said Centre will talk to the States to find the reason and try to resolve, so that taxpayers do not face problems.

Though such notices were framed in February and March, but due to Covid pandemic, these could not be delivered and are now being issued. One such notice issued by Gurugram GST Commissioner, asked a service company to submit self-attested copies of 20 statutory and tax compliance documents/records and 37 types of other records. These documents include copy of application for GST registration, registration certificate, GSTR forms along with challan, details of e way bills, Annual Report, Income Tax Returns along with Audit Report, Form 26 AS, lists of input service and capital goods suppliers, Contracts, MOUs, list of activities undertaken by the company, purchase order, sales book, stores ledger, finance ledgers, credit notes, debit notes, etc.

The notice asked the company to depute a nodal person, and has given 15-day time period. “In case of failure to comply with this notice, it would be presumed that you are not in possession of such book of accounts and proceedings as deemed fit may be initiated as per provisions of the Act and rules made there under against you without making any further correspondence in this regard,” the notice read.

A notice by Tiruchirapalli Commissioner asked a company to submit Annual Report & Director’s Report, Profit & Loss Account, Balance Sheet, Trial Balance, monthly returns and assessee profile beside responding to detailed questionnaire. The questionnaire, spread over seven pages, cover questions related with supply of services (service agreements, correspondences with the customers, quotation/tender files, cost sheets of services, price lists, income register/debit notes, job cards/work statements), receipt of inputs (vendor/supplier list, tender/quotation documents, purchase orders, bank account), and input/input services used in exempted services (costing of outward supplies, job cards/ work statements).

“It appears that while the industry at large is still getting accustomed to frequently changing GST laws and compliance mechanism, companies will also have to spend another round of time and effort on preparing for the departmental audits,” another company executive said.

Commenting on the whole exercise, Harpreet Singh, Partner at KPMG said after implementation of e-invoicing and completion of annual return and audit certification for FY 2018-19, “The next GST challenge in coming months would be, collating documents, preparing flow charts, answering questionnaires and explaining reasons for difference in multiple reconciliation, during department-initiated GST Audits.”