ICAI has compiled/ shared a set of 49 FAQs on important issues relating to filing of GST Audit Report in Form GSTR-9C (i.e. Reconciliation Statement and Certification as required under Sections 35(5) and 44(2) of the CGST Act, 2017 read with Rule 80 of the CGST Rules, 2017, as under:
Q 1. Are the accounts maintained by the registered taxable person required to be audited by a Chartered Accountant/Cost Accountant under GST?
Ans. It has been stated in the law that every registered person whose aggregate turnover during a financial year exceeds the prescribed limit of Rs. 2 Crore, shall get his accounts audited by a chartered accountant or a cost accountant. In all other cases, no audit is required to be conducted by the Chartered or Cost accountant.
Q 2. What is the turnover that should be reckoned to determine the applicability of audit under GST?
Ans. Section 35(5) commences with the expression “every registered person whose turnover during a financial year exceeds the prescribed limit” whereas the relevant Rule 80(3) uses the expression “every registered person whose aggregate turnover during a financial year exceeds two crore rupees”. It must be noted that the word turnover has not been defined whereas the expressions aggregate turnover has been defined. One may note that the expression turnover in State or turnover in Union territory is defined. In this backdrop the following understanding is relevant:
a) Aggregate turnover is PAN based while turnover in a State / UT is similarly worded except to the extent that turnover in a State / UT is limited to a State;
b) It is therefore, reasonable to interpret that the word turnover used in section 35(5) ought to be understood as aggregate turnover (PAN level).
c) For the financial year 2017-18, the GST period comprises of 9 months whereas the relevant section 35(5) uses the expression financial year;
Therefore, in the absence of clarification from Government and to avoid any cases of default, it is reasonable to reckon the turnover limits prescribed for audit i.e., Rs. 2 crores for the whole of the financial year which would also include the first quarter of the financial year 2017-18.
Please also note that where the expression aggregate turnover (PAN level) is considered, please consider the taxable value under section 15 and not the amount as accounted in the books of accounts. For eg. do not ignore taxable value of stock transfers while examining this threshold limit.
Q 3. Should the supply of alcohol for human consumption be included in determining the threshold limit of Rs. 2 crores by a person registered under GST?
Ans. The definition of aggregate turnover includes exempt turnover. Exempt turnover is defined under CGST Act to mean supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services tax Act and includes nontaxable supply.
Non-taxable supply is defined under section 2(78) of CGST Act to mean a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services tax Act.
Section 9(1) of CGST/ SGST Act and Section 7(1) and 5(1) of UTGST and IGST Act respectively exclude alcoholic liquor for human consumption from the levy/charge of GST. On a combined reading of the charging sections with the definitions of non-taxable supply and exempt supply, it becomes clear that alcoholic liquor for human consumption forms part of exempt turnover. Since aggregate turnover includes exempt turnover, value of alcoholic liquor for human consumption is to be included while computing threshold limit of Rs. 2 crores.
Q 4. Will the term ‘aggregate turnover’ includes stock transfers/ cross charges effected between branches located in two different states?
Ans. Section 2(6) of CGST/ SGST Act defines aggregate turnover to include ‘inter-state supplies of person having same PAN’. Thus, stock transfers/ cross charges of services provided from a branch located in one state to a branch located in another state will be included in the aggregate turnover of the branch supplying the goods/ services.
Q 5. Will the term ‘aggregate turnover’ includes stock transfers effected within the State having same GSTIN for determining the threshold limits?
Ans. The term ‘aggregate turnover’ shall not include stock transfers effected within the same State having single GSTIN for the purpose of determining the threshold limit. However, where more than one GSTINs has been taken for branches located in the same state, then such branch transfers shall be included for computing threshold limit of Rs.2 crore to identify applicability of this audit requirement.
Q 6. Will a Registered Person who is exclusively having exempted supplies of goods or services exceeding Rs. 2 crores be required to file Form GSTR 9C?
Ans. The definition of ‘aggregate turnover’ includes even exempted supplies. Therefore, even if a person is registered under GST and only provides exempted supplies, he will have to file Form GSTR 9C.
Q 7. Is Form GSTR 9C required to be filed for each registration obtained by a person in respect of each of the states?
Ans. Section 35(5) of SGST Act, also requires conduct of audit in addition to Section 35(5) of CGST Act. Thus, audit is required state wise for compliance of Section 35(5) of SGST Act. Therefore, a person having registration in Karnataka and Tamil Nadu is required to be audited under KGST Act, 17 and TNGST Act, 17. GSTR 9C is required to be filed as per Rule 80(3) of KGST Rules, 2017 and TNGST Rules. Thus, a person having registration in more than one state is required to file GSTR 9C registration wise, in each and every state.
Q 8. Is a Chartered Accountant required to be registered as a GST practitioner for the purpose of certifying Form GSTR 9C?
Ans. Section 48 of the CGST/ SGST Act read with Rule 83(8) of the CGST/ SGST Rules authorizes a GST practitioner to undertake the following activities:
a) furnish the details of outward and inward supplies;
b) furnish monthly, quarterly, annual or final return;
c) make deposit for credit into the electronic cash ledger;
d) file a claim for refund; and
e) file an application for amendment or cancellation of registration:
The GST Act/ Rules do not vest a GST practitioner with the power to audit under section 35(5). The power to audit is granted only to a Chartered Accountant or Cost Accountant. Therefore, a Chartered Accountant is not required to be registered as a GST practitioner for the purpose of certifying Form GSTR 9C.
Q 9. What are the documents to be enclosed along with GSTR 9C?
Ans. As per section 35(5), a copy of audited accounts and such other documents in such form and manner ‘as may be prescribed’ ought to be submitted along with reconciliation statement (i.e. GSTR 9C). Prescription ought to be provided in the Rules as the Act employs the term ‘as may be prescribed’. No documents other than audited annual accounts have been prescribed in Rule 80(3).
Part B of GSTR 9C requires the GST Auditor to enclose a copy of audit report of the entity, where the audit of the entity has been carried out by another person under a statute other than GST Act. In the said case, documents declared by the said statute which forms a part of the audited financial statements must also be annexed to the audit report.
Q 10. Should Form GSTR 9 and Form GSTR 9C be filed separately
Ans. Section 44(2) of the CGST/ SGST Act 2017 provides a Registered Person to file annual return in Form GSTR 9 along with a copy of the reconciliation statement in Form GSTR 9C. Thus, Form GSTR 9C has to be filed along with Form GSTR 9 in cases where aggregate turnover exceeds Rs. 2 crores.
Q 11. What is the time limit to file Form GSTR 9C?
Ans. Section 44(2) requires reconciliation statement in Form GSTR 9C along with annual return in Form GSTR 9. As per section 44(1), the due date to file annual return is on or before the thirty-first day of December following the end of such financial year for which annual return is being prepared. Thus, it can be inferred that due date for filing reconciliation statement in Form GSTR 9C is also on or before thirty-first day of December following the end of such financial year for which reconciliation statement is being prepared.
Q 12. What are the consequences of the failure in submitting the annual return and not getting the accounts audited?
Ans. The following are the consequences of the failure in submitting the annual return and not getting the accounts audited:
a) Section 44(2) of the CGST Act and State /Union Territory GST Act provides that every Registered Person shall file electronically an annual return in Form GSTR 9 along with a reconciliation statement in Form GSTR 9-C, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement.
b) Section 47(2) of the CGST Act provides for levy of a late fee of Rs. 100/- per day (each under CGST Act and under SGST Act) for delay in furnishing annual return in GSTR 9, subject to a maximum amount of quarter percent (0.25%) of the turnover in the State or Union Territory. Similar provisions for levy of late fee exist under the State / Union Territory GST Act.
c) On a combined reading of Section 47(2) and Section 44 (2) of the CGST Act and State / Union Territory GST Act a late fee of Rs.200/- per day (Rs. 100 under CGST law + Rs. 100/- under State / Union Territory GST law) can be levied which would be capped to a maximum amount of half percent (0.25% under the CGST Law + 0.25% under the SGST / UTGST Law) of turnover in the State or Union Territory.
d) In a situation where a registered person gets GSTR 9C duly certified but fails to furnish both GSTR 9 and GSTR 9C on the common portal, the provisions of late fee cited in clause “a to c” supra would equally apply.
e) In a situation where a registered person files only GSTR 9, but fails to file GSTR 9C, the filing of GSTR 9 is not considered to have been defaulted, whereby the late fee cited in clause “a to c” supra would not apply. However, there may be consequences of default in complying with the provisions of Section 44(2).
Q 13. Can the late fee be waived off in genuine cases?
Ans. The Government may, by notification, waive in part or full, any late fee referred to in section 47 for such class of taxpayers and under such mitigating circumstances as may be specified therein on the recommendations of the Council. However, no notification has been issued by the Central Government/ State Government as on date.
Q 14. Is there any provision of filing the Revised Form GSTR 9C?
Ans. There is no provision enabling a dealer to file revised Form GSTR 9C. As such, some experts opine that, the Certificate once issued / filed cannot be revised as no such revision is permitted to audited reports by a Chartered Accountant. However, there is another view that since there are no specific bar/ restrictions under the GST law to file a revised audit report/ certificate, a revised audit report / certificate can be issued / filed. Care must be exercised to ensure that the relevant Form GSTR 9C is not taken lightly and filed with inaccurate particulars. Caution is advised in taking such a position unless Government issues any clarification in this regard. While one can appreciate that mistakes apparent which can creep in and therefore warrant a revision, it must be ensured that there is no mala fide intention at the time of filing this reconciliation statement. If felt necessary, the reasons for the need for revision and impact can be communicated on record which can be used as an evidence of bona fide and professional action.
Q 15. Will audit under Section 35(5) be applicable to Non-Filers or unregistered Persons liable to take registration?
Ans. The audit under Section 35(5) of the CGST Act to be conducted by CA or CWA is applicable only to a Registered Person. A non-filer is still a Registered Person under Section 25 of the CGST Act. Hence, he may be required to get the audit conducted under Section 35(5) of the said Act. Practically such a person would not have filed his returns at all and therefore Form 9 & 9C would not be possible. Therefore, there may be no audit for him.
However, unregistered Person who is liable to take registration under Section 25 of the CGST Act is a taxable person. But the said unregistered Person is not a Registered Person as defined under Section 2(94) of the CGST Act 2017. Hence in terms of Section 35(5) of the Act it is not required to get the audit done.
Q 16. What are the records to be reconciled in Form GSTR-9C?
Ans. The records to be reconciled in GSTR-9C are:
i) Books of accounts of registered person – if the registered person has multiple registrations, information needs to be derived from the Audited financials of the entity.
ii) Annual Return of Registered Person in Form GSTR 9.