Module 8: Departmental Audits, Assessments & Litigation under GST
📊 GST Audit by Tax Authorities
🔍 What is a GST Departmental Audit?
A GST audit is conducted by the tax department to verify the correctness of:
- GST returns filed
- Input Tax Credit claimed
- Tax payments made
- Compliance with provisions of the GST law
🚨 Legal Provision:
As per Section 65 of CGST Act, a GST audit can be initiated by a Commissioner or authorized officer at the taxpayer's place of business.
📋 Key Documents Reviewed:
- GSTR-1, GSTR-3B, GSTR-9 & GSTR-9C
- ITC ledgers
- E-way bill records
- Sales/purchase registers
- Stock registers
- Financial statements
🧾 Types of GST Assessments
Assessment under GST means the determination of tax liability under the law. There are multiple types of assessments depending on the scenario:
1. Self-Assessment (Section 59)
- Done by the taxpayer while filing returns like GSTR-3B and GSTR-1.
- Most common and routine.
2. Provisional Assessment (Section 60)
- Requested when the taxpayer is unable to determine the value or tax rate.
- Final assessment is done after submission of required documents.
3. Scrutiny Assessment (Section 61)
- Department reviews the filed returns and asks for clarifications if discrepancies arise.
4. Best Judgment Assessment (Section 62 & 63)
- Initiated if a registered person fails to file returns or is unregistered but liable to register.
5. Summary Assessment (Section 64)
- Applied in urgent cases to protect government revenue.
⚖️ Appeals & Litigation Process
📌 Appeal Hierarchy under GST
| Level | Authority | Relevant Section |
|---|---|---|
| 1st | Appellate Authority | Section 107 |
| 2nd | Appellate Tribunal | Section 112 |
| 3rd | High Court | Article 226/227 |
| 4th | Supreme Court | Article 136 |
🗂️ Common Appeal Scenarios:
- Wrong denial of Input Tax Credit
- Excess tax demand
- Incorrect classification
- Penalty disputes
- Interest on delayed payment
⏳ Timelines:
- Filing appeal to Appellate Authority – within 3 months of the order
- Pre-deposit of 10% of disputed tax amount is mandatory
🧠 Recent Legal Precedents in GST
🏛️ Key Case Laws to Know:
-
Canon India Pvt. Ltd. v. Commissioner of Customs (SC)
– Clarified jurisdiction of officers under GST -
Abbott Healthcare v. CST Kerala (HC)
– Held that bundled supply with healthcare is exempt -
Amit Cotton Industries v. Principal Commissioner (Guj HC)
– Addressed GST refund delays and procedural fairness
These cases underscore the importance of legal preparedness and documentation.
🧩 Best Practices for Businesses
✅ Keep all returns error-free and reconciled with financials
✅ Maintain digital records for at least 6 years
✅ Respond to notices on time to avoid escalations
✅ Seek professional advice for audit handling and legal drafting
✅ Use audit readiness tools to simulate assessments
📝 Conclusion
Departmental audits and assessments are no longer rare—they are part of GST’s compliance backbone. Businesses must proactively track legal updates, maintain robust documentation, and have audit strategies in place to avoid disputes and penalties.
Understanding the appeal and litigation framework is essential to protect your interests when disagreements with tax authorities arise.
📣 Need Help with GST Audits or Litigation?
Verotus Finlegal Solutions LLP offers:
- GST Audit Assistance
- Litigation & Notice Handling
- Departmental Representation
- Documentation Support
- Appeal Filing & Case Management
📍 Based in Kolhapur, Maharashtra
🌐 www.verotusllp.com
📞 +91-7066336680
