Check list for verification of the outward supplies documents in GST
All the elements of Rule 46 have to be verified for each and every document. Number of HSN Codes digits have been mentioned on the tax invoices as per Notification No 12/2017 – Central Tax Dated 28th June 2017.
Verify for any cancellation of tax invoices, as per the current provisions of GST, there is no provision for cancellation of tax invoices except as per the provisions of Section 67, Sub-section 12. If there are any cancellation of tax invoices other than the above said provisions the same has to be classified in the audit findings and also reported in the audit report.
The tax invoice numbers must be verified if they are unique for each financial year and in case of projects located in different geographies the same should be numbered project wise. If the same is not observed, the same should be reported in the Audit Report as well as in the audit findings for the reasons of missing numbers across the document series. These numbering series should be verified with the data filed in the GSTR – 1, Table 13, if there any difference the same should be reported accordingly.
The most important thing here is on the signatures on the tax invoices, it has to be signed by the authorized signatories only and not by the authorized representative. The scope of an authorized representative is defined in section 116, sub-section 2 of the CGST Act.
The item classification has to be vetted as per the item properties in relation to the Customs Tariff Act. Any change in the item properties can be classified into a different item and which could result in short recovery of the tax and which attracts penal provisions as per section 73 and section 74. The rate of interest and penalty are applicable as per the provisions of Section 51 and Notification No 13 – Central Tax dated 28th June 2017.
Verify if there is any reverse charge applicable on the outward supplies? If yes,
- Verify if there are marked separately on the invoice?
- Are they accounted in a separate ledger?
- Is there a separate serial number for such tax invoices or who they are being identified and tracked?
Verify if there are any outward supplies on which taxes are levied over and above MRP? If yes report them in the audit report and also in the audit workings and findings.
Confirm that for each and every outward supply there is a corresponding document with respect to GST? If there are any such missing transactions, report the same in the audit report and record it in the audit observations and findings documents.
Verify if the invoices are signed by the authorized signatories or not?
Verify if all the provisions of Sub-Rule 1 & 2 of Rule 48 are met, if not record it in the audit observations and findings documents.
Verify if the tax invoices are issued within the stipulated time as per the provisions of Rule 47 of the CGST Rules, especially for the service providers.
Verify if the valuation on the invoices is done correctly as per the provisions of Rule 25 to Rule 37.
Verify if there are any related parties as per explanation is given in provisions of section 15 of the CGST Act. If yes, verify if valuation in such cases has arrived correctly as the provisions of the Central Excise Act are changed where it says cost plus 10% but in case of GST it is a residuary provision.
Verify if a debit or credit notes are issued, if yes confirm they are issued as per the provisions of Section 34 of the CGST Act as it is applicable only in case outward supplies for which the tax invoice issued by the taxpayers and not for the purchase returns.
In case of zero rated supplies, verify if the exports are happening on the payment of duties or without payment of duties.
Verify if the bond is executed in case of without payment of duties and ITC is not claimed as per the process.
Verify if there are any invoices which are issued before the execution of the bond and exported without payment of duties, report the same in the audit report and record it in the audit observations and findings documents.
Verify if any input tax credit is taken on the inward supplies related to exports without payment of duties, if found report the same in the audit report and record it in the audit observations and findings documents.
Verify if there any refund claims on the exports without payment of duties for exports if any are pending, report the same in the audit report and record it in the audit observations and findings documents.
Verify and if possible ascertain the reasons for the refund being held pending or if there is any mismatch between the data entered in the GSTR – 1 and the icegate portal, report the same in the audit report and record it in the audit observations and findings documents.
Verify on all the invoices if place supply is mentioned correctly as per the provisions of section 10,12, 12, 13 & 14 as per the IGST Act 2017. If there is any difference report the same in the audit report. Also compute the amount of actual tax liability along with the applicable interest and penalties if any. Report the same in the
audit report and record it in the audit observations and findings documents.
Verify if there any deemed exports during the period of the audit, if yes verify if the tax is levied at 0.10% and reported in the GST Returns correctly.
Verify if there are any Bill To and Ship To transactions, in these transactions, the place of supply will the location of the principal supplier who has passed on the lead and not of the party to whom the goods are being shipped.
Verify if there are any export of services, if yes, validate for each and every category of transaction or each and every transaction satisfies all the conditions specified in the provisions of Section 2, sub-section 6. If any of the conditions is not met, the same should be qualified and reported in the audit report.
Verify if any taxes are paid on a provisional basis as the taxpayer is not able to assess the taxable value or correct classification or tax rate etc.,, If any such transactions are there, the same should be reported in the Audit report and also verify the procedures to be followed as per the provisions are followed correctly and such observations if any should be part of the audit report.
Verify if the tax liability stated in the GST returns is correct and it is in line with the financial statements. To verify the tax liability as per financial statements and GST Returns some of the items have to be reduced from the outward supplies as all transactions on which GST is levied and collected will not be part of the turn over as per the financial statement.
The tax liability as per GST has to be reconciled with the GST liability as per the GSTIN’s turnover and the actual liability on the turnover. For this a simple reconciliation statement can be prepared and the following format can be used with minimal changes based on the uniqueness of the organization’s business model and requirements.
