Recovery Audit and Appeals Under GST

Recovery Audit and Appeals Under GST


According to the laws under Goods and Service Tax,  GST is payable based on the self-assessment. If the tax is paid correctly by the taxpayer based on the self-assessment, no issues will arise in such a case. However, if any short payment or wrong payment, or misuse of the input tax credit is noticed, then GST officials can demand the recovery against the taxpayer under the provision of recovery under GST.

Some of the cases where recovery demand under GST is applicable are provided below;

•          Where the chances of fraud are limited under Section 73 of the Goods and Service Tax. However, this section is not applicable where there is short payment or non-payment of taxes or wrongful refund of taxes.

•          Wrong utilization of Input Tax Credit

•          If there is another reason other than fraud for tax evasion

Under GST authorities, the relevant officer is required to provide a show-cause notice to the taxable person based on the taxable amount to be paid by the taxpayer along with interest and payable.

Under GST authorities, the proper officer is required to issue a show-cause notice within 3 months before the specified time limit. The aforesaid time limit can extend up to 3 years from the filing date of the annual return for the specified financial year for the taxable amount relating to the same.

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The term Audit refers to the process for the evaluation and examination of records, returns, and documents that are maintained by the persons who are subject to pay tax under GST. The objective of this audit is correct verification of the annual turnover, input tax credit claimed, taxes paid, claimed a refund, etc. Moreover, the audit can help to ensure access to the taxpayer for the compliance provision under GST.

Threshold for Audit:-

Under GST law, every registered taxpayer having or exceeding the annual turnover of Rs. 2 crores in a particular financial year has to audit its books of accounts by a charted accountant or cost accountant. However, electronically, the taxpayer can file the audit.  Some of the details that need to keep in mind regarding the electronic filing are provided below;

•          The form GSTR 9  is used for filing annual returns by the end of the upcoming financial year i.e. 31st December

•          The copy of audited annual accounts

•          Form GSTR-9C is considered as a certification reconciliation statement. It shows the supplies value provided in the return under the audited financial statements.

•          Any other details or information as prescribed under GST law

•          The reasons to provide additional details if any as required

•          The  taxable person's rights and obligations

If it is found that there is a wrong refund, short paid and unpaid taxes, wrong input tax credit have been claimed, then the action for recovery can be demanded, and accordingly the same will be initiated.


Under the provisions of Appeals under GST, Appeals can be filed within the 3 months from the issue of communication order by GST officials by the taxable person. In the case of appeals, the purpose and reason for the appeal and verification of the form should be signed by the taxpayer.  The hard copy of the signed document containing the detailed information of appeal along with the certified copy of the decision has to be filed before the Appellate Authority under GST in triplicate within 7 days from the filing date on the electrical appeal.

At the time of filing an appeal, the GST tax, fine, interest and penalty are required to be filed by the taxable person. Apart from that, a minim of 10% of the balance taxable amount has to be deposited in case of a disputed tax.  After filing the appeal, the receipt of acknowledgment will be issued with the appeal number in form GST APL 02.

The Commissioner of GST has to file for an application prior to the Appellate Authority within 6 months from the date of issuing the communication decision with regard to APL GST 03 after filing the appeal. This can be communicated electronically. Maximum 3 years of adjournment can be provided or granted to the opposite party for furnishing a reasonable cause in writing. While providing the conclusion, the Appellate Authority has to issue the order with details of GST APL-04 showing the confirmed amount as per demand finally.

Read Blog: What are The Meaning of IGST, SGST, UTGST with Input Credit Adjustment?

BY: Admin Tax4wealth

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