GST Audit & Assessment Support | Savlana Init

GST Compliance · Audit & Assessment

GST Audit Support — Prepared. Represented. Demand Minimised.

GST departmental audit under Section 65 or special audit under Section 66 — we reconcile your returns with your books before the audit begins, compile records, draft objection replies, and represent you throughout the audit to minimise the demand outcome.

GST audits under Section 65 of the CGST Act are conducted by the department's audit wing — the officer examines records, accounts, returns, and documents at the business premises or at the department's office to verify the accuracy of turnover declared, taxes paid, ITC claimed, and refunds obtained. The audit must be completed within 3 months of commencement (extendable to 6 months) and concludes with an audit report in Form GST ADT-02. Where deficiencies are found, the audit officer initiates demand proceedings — typically under Section 73 (non-fraud) or Section 74 (fraud/suppression).

A special audit under Section 66 is an elevated form of audit — where the officer directs a Chartered Accountant or Cost Accountant nominated by the Commissioner to examine specific aspects of the accounts and report on them. Special audits are ordered when the officer believes the declared value of supply or ITC availed is significantly incorrect and cannot be adequately examined in a departmental audit. The cost of the special audit is borne by the department, but the findings directly feed demand proceedings if adverse.

The most effective time to intervene in a GST audit is before it begins — not after the audit report is issued. Pre-audit reconciliation of turnover (GSTR-1 vs. books), ITC (GSTR-3B vs. GSTR-2B vs. ledger), and tax payments, combined with a structured explanation of all reconciling items, dramatically reduces the scope for adverse audit findings. We begin audit preparation proactively, organise your records systematically, and accompany you through every step of the audit process.

Our GST Audit Support Services

Pre-Audit Reconciliation

Proactive reconciliation of GSTR-1 vs. books turnover, GSTR-3B vs. GSTR-2B ITC, and tax payment ledger — with explanations for all differences documented before the audit team arrives.

Departmental Audit Support — Section 65

Preparation for Section 65 audit — document organisation, record compilation, and liaison with the audit team throughout the audit period.

Special Audit Support — Section 66

Assistance during a Section 66 special audit — document compilation, submissions to the nominated CA/CMA, and review of the draft audit report before finalisation.

GST ADT-01 Notice Response

Formal response to the GST audit notice in Form GST ADT-01 — confirming the audit date, place, and initial document availability.

Document Compilation & Organisation

Compilation of books of accounts, purchase and sales registers, GST returns, invoices, e-way bills, job work records, and correspondence — in the format required by the audit team.

Audit Objection Replies

Preparation of detailed replies to audit objections raised during the examination — with legal submissions, factual evidence, and applicable case law to reduce the demand quantum.

GST ADT-02 Audit Report Review

Review of the final audit report in Form GST ADT-02 — identifying contestable findings and developing the response or demand-contestation strategy.

Demand Avoidance & Voluntary Payment Advisory

Advisory on voluntary payment of undisputed audit findings before a show cause notice is issued — avoiding the 100% penalty under Section 74 that applies if proceedings escalate to a fraud allegation.

Our Process

Pre-Audit Health Check

Returns, ITC records, and books are reconciled before the audit starts — explanations for every reconciling item are documented and organised for the audit team.

Document Organisation

All audit-relevant records are compiled in a structured audit file — returns, invoices, ITC register, payment challans, e-way bills — ready for the audit team.

Audit Attendance & Representation

Our CA accompanies you during the audit — answering officer queries, providing clarifications, and ensuring incorrect findings are challenged in real time rather than after the ADT-02 is issued.

Objection Reply Preparation

All audit objections are replied to with factual evidence, legal submissions, and relevant case law — contesting every incorrect finding before the audit report is finalised.

Post-Audit Demand Strategy

If the audit results in a demand, we advise on the optimal response — voluntary payment of undisputed amounts, DRC-03 filing, or formal contestation through show cause notice proceedings.

Why It Matters

✓Pre-audit reconciliation removes surprises — every difference explained

✓All audit records organised before audit team arrives

✓CA present at every audit session — incorrect findings challenged immediately

✓Audit objections replied to with legal authority and factual evidence

✓Section 66 special audit submissions prepared with technical precision

✓ADT-02 audit report reviewed for contestable findings before demand

✓Voluntary payment of undisputed amounts timed to avoid 100% penalty

✓Post-audit demand strategy — pay, contest, or appeal — clearly defined

Frequently Asked Questions

GST audits are selected through the department's risk management system — comparing GSTR-1 and GSTR-3B figures, ITC relative to output tax, e-way bill turnover, TDS data, and sector-level benchmarks. Large unexplained mismatches, consistently high ITC ratios, frequent refunds, and low effective tax rates relative to sector norms are common triggers. Specific intelligence or third-party data can also initiate a targeted audit.

The taxpayer must make available all books of account and related documents — purchase and sales ledgers, stock registers, production records, invoices, debit/credit notes, e-way bills, bank statements, import/export documents, and all filed GST returns for the audit period. The officer can also inspect the principal place of business and additional places of business during the audit.

Section 65 is a departmental audit conducted by GST officers. Section 66 is a special audit ordered by the Deputy/Assistant Commissioner where the officer believes the declared values or ITC are materially incorrect and a more detailed examination is needed — requiring a nominated CA or CMA to examine the accounts and report to the Commissioner. Section 66 findings typically have a higher evidentiary weight in subsequent demand proceedings.

The ADT-02 audit report details the audit findings and any tax shortfall. The taxpayer can accept the findings and pay voluntarily (triggering reduced penalty) or contest the findings. If not resolved, the audit officer initiates demand proceedings by issuing a show cause notice in Form DRC-01 under Section 73 or Section 74, depending on whether fraud is alleged.

Yes. The ADT-02 is not a demand order — it is the preliminary audit report. The taxpayer can make representations against the findings between ADT-02 and the issuance of the show cause notice. A well-drafted representation can result in the audit officer dropping or reducing the contested findings before a formal demand is raised.

Voluntary payment of tax and interest identified in the audit before a show cause notice is issued eliminates the penalty entirely under Section 73(5). Once a show cause notice is issued, penalty at 10% (Section 73) or 25% (Section 74) of the tax amount applies even on payment. Timing the voluntary payment correctly is a significant tax-saving strategy.

Facing a GST audit — departmental or special?

We prepare your records before the audit starts, attend and represent you throughout, reply to objections, and advise on the demand strategy — minimising your audit exposure from the first day.