Points to take care in GST audit of 2018-19

GST audit of 2018-19: Important issues:

2017-18 was first year of GST. We did audit but the main focus was on the filing of the form. Generating Json from the utility was a challenge. But now we all are trained for technical issues. It is time to focus on the quality of the audit.  Some provisions of GST requires special attention. Let us discuss them one by one.GST audit of 2018-19 will be easier technically but harder conceptually.

Applicability of E-way bill provisions:

E-way bill provisions were not applicable for the first year. Rule 138 was notified and now we need to take care of E-way bills also. Following outcome can be there:

• Invoice without supply is an offense u/s 122 of the CGST Act.
• The E-way bill is proof of the movement of goods. Its absence can result in dire consequences. It may be a case of fake invoices.
• E-way bill is required even if there is no supply.
• Every movement of the value of more than Rs. 50000 is covered by E-way bill provisions.
• Many cases of detention are there for the absence of an E-way bill. Their outcomes may also be relevant.
• Bill to ship to transactions can be traced from E-way bill. In this case Pos will be the location of bill to party.

Checklist:

Check some of the invoices for E-way bills on a sample basis. We can rely on testing by the statutory auditor but still, a sample check is required.

Transactions of PY declared in returns of the current year:

Tables 10,11,12 and 13 of the annual return of PY shall be considered. These tables belong to the supplies/ITC of PY declared/reduced in the current year. We shall calculate the current year amount with adjustment of PY data.

Related Topic:
Draft disclosures in GST audit report

Transactions of CY declared in returns of next FY:

These transactions will go in table 10,11,12,13 of current year’s annual return. Now how we will be able to reflect the correct amount of current year? Let us use the following formula:

Turnover of CFY:                              xxxxx

Adjustments:                                     xxxxx

Less: TO of PFY shown in CFY:       xxxxx

Add: TO of PFY reduced in CFY:      xxxxx

TO as per return:                               xxxxx

How to calculate ITC of CY:

ITC claimed in return:                        xxxxx

Less: IT claimed for PFY                   xxxxx

add: ITC reversed for PFY                 xxxxx

Related Topic:
GST Year End Checklist

Series of documents declared in GSTR 1:

This may also help in fake invoices for missed supplies. We need to check the series declared in GSTR 1 and actual invoices. It may be done on a sample basis. This will also help in tracing a lack of invoice compliances. Section 31 of CGST Act provide that:

• Invoice of Goods shall be raised before the movement of Goods.
• Invoices for services shall be raised within 30 days of provisioning of services.