GST Audit | Savlana Init

GST Compliance · GST Audit

GST Audit — Records Ready. Representation Strong.

GST departmental audit or special audit — we reconcile your returns with your books before the audit starts, organise all records, represent you during the audit, reply to objections, and advise on the demand outcome — protecting your position from day one.

A GST audit is a systematic examination of a registered taxpayer's books of accounts, returns, invoices, and other records to verify the accuracy of the GST positions declared — turnover reported, tax paid, ITC claimed, and refunds obtained. Audits under the CGST Act are conducted in two forms: departmental audits under Section 65 (by GST officers) and special audits under Section 66 (by a CA or CMA nominated by the Commissioner). Both types can lead to demand proceedings if discrepancies are found.

A departmental audit under Section 65 is initiated by the Commissioner through an audit notice in Form GST ADT-01. The audit team examines records over a period of up to 3 months (extendable to 6 months) and issues the audit report in Form GST ADT-02. The taxpayer can respond to the audit findings and make representations before the demand notice is issued. A Section 66 special audit is triggered when the department believes the declared turnover or ITC is materially incorrect and the complexity requires specialist examination — the nominated CA/CMA files a special audit report, which the department uses as the basis for demand proceedings.

The most effective GST audit strategy is proactive preparation — reconciling returns with books, explaining all differences in writing, and organising records so the audit team has a complete, consistent picture. A well-prepared taxpayer who can explain every reconciling item between GSTR-1 and the books significantly reduces the risk of adverse audit findings. We start audit preparation as soon as the audit notice is received — sometimes even before — so the taxpayer enters the audit with a documented, defensible position on every material item.

Our GST Audit Services

Pre-Audit Reconciliation

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

Record Organisation & Compilation

Compilation of books of account, purchase and sales registers, invoices, debit/credit notes, e-way bills, tax payment challans, and correspondence in the format required by the audit team.

ADT-01 Notice Response

Formal response to the audit commencement notice confirming the audit date, place of audit, and availability of records.

Audit Attendance & Representation

CA representation during the audit — accompanying the taxpayer at every audit session, responding to officer queries, providing clarifications, and preventing incorrect findings from entering the audit record.

Audit Objection Reply

Preparation of detailed replies to audit objections raised during the examination — factual evidence, legal submissions, and applicable case law for each contested finding.

Section 66 Special Audit Support

Document compilation and written submissions to the nominated CA/CMA conducting the special audit — presenting the taxpayer's position on each item under examination.

ADT-02 Audit Report Review

Review of the final audit report in Form GST ADT-02 — identifying contestable findings and advising on the response strategy before demand proceedings are initiated.

Voluntary Payment & Demand Strategy

Advisory on voluntary payment of undisputed audit findings before the show cause notice is issued — avoiding the Section 73/74 penalty structure — and contestation strategy for disputed amounts.

Our Process

Pre-Audit Preparation

All returns and books are reconciled — every difference is explained and documented before the audit team sees the records. A comprehensive pre-audit file is prepared.

Record Compilation

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

Audit Attendance

Our CA attends every audit session — answering queries, providing clarifications, and ensuring incorrect findings are challenged at the session rather than after the report.

Objection Reply Preparation

Every audit objection is replied to with factual evidence and legal submissions — contesting every incorrect finding before the ADT-02 is finalised.

Post-Audit Strategy

If the ADT-02 report contains demand-generating findings, the optimal strategy is determined — voluntary payment of undisputed amounts, representations against disputed findings, or appeal.

Why It Matters

✓Pre-audit reconciliation eliminates avoidable surprises

✓All records organised and audit-team-ready before commencement

✓CA present at every audit session — findings challenged in real time

✓Objections replied to with legal authority before ADT-02 is issued

✓Special audit submissions prepared with technical depth

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

✓Disputed audit findings contested before escalation to demand

✓ADT-02 report reviewed immediately for demand prevention strategy

Frequently Asked Questions

GST audits are risk-selected by the department — based on GSTR-1 vs. GSTR-3B mismatches, ITC ratios, e-way bill turnover, TDS cross-data, income tax return inconsistencies, and sector benchmarks. Businesses with large unexplained discrepancies, high ITC claims, frequent refunds, or low effective tax rates relative to sector peers are most likely to be selected.

The taxpayer must make available: books of account; purchase and sales registers; GST returns for the audit period; purchase invoices, sales invoices, debit/credit notes; e-way bills; tax payment challans; bank statements; import/export documents; job work records; and any other document the audit officer specifies. The officer can inspect the registered premises and all additional places of business.

Section 65(4) provides that the audit must be completed within 3 months of commencement. The Commissioner can extend this to a total of 6 months where there is sufficient cause. The audit is deemed to have commenced from the date the notice for audit was served or the date the audit actually began, whichever is earlier.

A GST audit under Section 65/66 is conducted by the GST department to verify the correctness of GST returns — turnover, ITC, and tax payments. A tax audit under Section 44AB of the Income Tax Act is conducted by a CA engaged by the taxpayer to verify income tax returns. The two audits are independent — but the income tax audit report (Form 3CA/3CB with 3CD) is often used by the GST audit team as a cross-reference for turnover verification.

Yes. The audit report in ADT-02 is not a demand order. Between the audit report and the issuance of the show cause notice, the taxpayer can make representations to the auditing officer — contesting incorrect findings and providing additional evidence. A well-drafted representation can result in the officer dropping or reducing the contested findings before a formal demand is raised, significantly reducing the cost and time of the dispute.

Contact a CA immediately. Do not wait until the audit date. Begin reconciling returns with books, identifying and explaining all differences. Organise all records systematically. The pre-audit period is the most valuable time in the audit process — a taxpayer who enters the audit with reconciled records and documented explanations faces a far lower risk of adverse findings than one who scrambles to find records during the audit.

Facing a GST audit?

We prepare your records before the audit, attend every session with you, reply to every objection with legal submissions, and advise on the demand strategy — minimising your GST audit exposure from day one.