Various Remarks or Qualification which GST Auditor can make

Form GSTR- 9C

The GST Auditor has to make the following remarks and qualifications in the GST Audit Report after making ample observations in the audit process-

  1. List of documents not maintained by the company in Para 2:

The documents listed in Section 35 read with Rule 56 to Rule 58 of the Central Goods and Services Tax (CGST) Act, 2017, must be properly maintained by the company where the GST Audit Service is being conducted. A detailed information about the same is to be intimated in the Paragraph 2 of the Audit Report.

  1. Observation and qualification in Form 9C in Para 5:
  2. Basis of the GST Audit- The GST Audit must take into account the company’s records to be compliant with the GST Laws. The audit is to be conducted as per the laid principles and standards on auditing that are generally accepted in India. A reasonable basis for the audit and the opinion about the same by the auditor is to be filed in the Reconciliation Statements in the Form 9C.
  3. Deemed Supply in Table 5D- Deemed Supplies mean any supplies that have been made without any consideration. These are related to the activities that have been specified in the Schedule I as per the Section 7(1)(c) of the CGST Act, 2017. Such transactions and the details related to them is to be filed under Table 5D in Form 9C.
  4. Turnover for period starting from April 2017 to June 2017 in Table 5G- The turnover for the period from April 2017 to June 2017 is to be deducted from the total turnover of the taxpayer for the Financial Year 2017-2018. This has be be furnished in Table 5G of the Form 9C.
  5. Revenue that is unbilled at the year end of the financial year in Table 5H- The unbilled revenue for which no separate exercise has been conducted for its validation has to be furnished in Table 5H of the said form.
  6. Adjustments done in turnover as per Section 15 and the rule thereunder in Table 5M- No adjustments is warranted under Section 15 and the rule thereunder on the outward supply that have taxable value that are to be reported in Form GSTR-9. This is to be filed under Table 5M of the Form GSTR 9C.
  7. Value of the Exempted, Nil Rated, No-Supply Turnover and Non-GST Supplies in Table 7B- The value of the Nil Rated, exempted, non-GST supplies and no-supply turnover has to be declared in the Table 7B of Form GSTR-9C.
  8. Non-payment of Reverse Charge Mechanism (RCM) even by single amount- The outward supplies for which the receipient has paid taxes on the reverse charge mechanism basis, cannot be disclosed or identified by the company’s management and the in-charge of the governance.
  9. Reporting the RCM paid by the recipient in Table 7D: Rule 54(3) for GTA Suppliers- The taxes paid by the receipient on the basis of reverse charge mechanism for the outward supplies are to be disclosed in the Table 7D of the Form GSTR-9C.
  10. Rate-wise tax liability on the outward supplies in Table 9- The details of the taxable value as per GST rate wise and applicable GST on the outward supply are to be furnished in Table 9 of the said form.
  11. Reporting the interest paid in Table 9L- The details of the payments made for the taxes for the period starting from July, 2017 to March, 2018 declared in the Form GSTR-9 are to be diclosed and reported in the Table 9L of the Form GSTR-9C along with the payment of interest on the same.
  12. Reporting the levied penalties in Table 9N- The facts related to the penalties based on the facts provided by the management and no penalty notice received from the Tax Department are disclosed in Table 9N.
  13. Trans credits to be disclosed in Table 12B- The claims made in Form Trans-1 and Form Trans-2 have to be verified by the GST Auditor. This to be filed in Form GSTR-9C under Table 12B.
  14. ITC Reversal and the 180 Days time period- The availed ITC and its reversal has to be reported based on the available records and information furnished by the management. These are to be thoroughly checked and verified by the auditor and is to be disclosed in the form.
  15. Ineligible ITC and the exempted turnover- The taxpayer’s exempted turnover comprises the interest earned from the bank. The availed ITC is part of the taxable turnover and its reversal on the basis of proportion is hence not applicable under Rule 42 of the CGST Rules, 2017.
  16. ITC as per Form GSTR-2A and Form GSTR-9C- There are some amount that have not appeared in Form GSTR-2A but has been claimed as credit by the Taxpayer and vice versa. Also, due to difference in both the above-mentioned forms, no liability arises for the Itc Reversal or excess claims.
  17. Reporting of RCM-
  • The compliance related to the Reverse Charge Mechanism under Section 9(4) of the CGST Act, 2017 and Section 5(4) of the IGST Act is to be reported for the period from 1st July, 2017 to 13th October, 2017.
  • The ITC claimed by the taxpayer on the basis of the payments made for the year of payment for which the amount has been paid in the year 2018-2019, but not shown in the Form GSTR-9C.
  • Where the taxpayer has not maintained a complete record of the inward supplies for whoch reverse charge mechanism is applicable as per Section 9(3) or Section 9(4) of the Act.
  • Liability of any Inward Supplies for which RCM is applicable under Section 9(3) or Section 9(4) of the CGST Act, 2017.
  1. Head-wise expenses in ITC in Table 14- In Table 14 of the Form GSTR-9C the expense head-wise availed Input Tax Credit and the related taxable value is to be disclosed by the management of the company.
  2. Valuation on Inventories- The taxpayer has to follow Para 6 to Para 13 of the AS-2 for all the accounting purchases related to Valuation of Inventories, for which the Cost of purchases includes only those taxes that are recoverable subsequently by the company.
  3. Disclosure of the Capital Goods and ITC thereof and the Accounting Treatment- The taxpayer has to follow the Revised AS-10 Para 17 stating the “Property, Plant and Equipment”.
  4. Miscellaneous Inward Supplies other than the taxable ones that are not included in the taxable value of Inward Supplies- The inward supplies for the purpose of administrative use are not filed during the GST Return Filing by the taxpayer but these administrative expenses are not ascertainable because the taxpayer has not maintained a proper records of the same. Due to which the taxpayer has not claimed the ITC on the paid taxes for the inward supplies in the filed returns.
Author: Anil Agrawal
EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or