The due date of filing of Annual return under form GSTR-9 and GST Audit under form GSTR-9C, for the financial year 2017-2018 has been extending for a long time now. Right from the original due date of 31/12/2018, the same got extended up to 30/11/2019. There are obviously many reasons as to why the due date kept on getting extended. GST being a new law introduced with effect from 1/7/2017, due to the nuances in the law, compliance structure and more importantly widening of the base of the tax law, there were plenty of challenges that the industry had to undergo. The hurdles in the way of annual return and the GST Audit was that the reporting requirements and the mechanism was not really understood with absolute clarity. There have been interpretational issues as well in respect of it. Thus, in the light of the same the severity of the correctness of the Annual return and the GST audit went on increasing. Therefore, we would be discussing in this write up the necessary documentation that one should maintain in order to ensure that the GST Annual return and GST Audit is carried our smoothly. Besides in the light of the fact that the scrutiny or adjudication may be the next step to climb, it is important that the pre-preparation of the same needs to be done with due professional care. The documentation should be such which would be helpful to substantiate the claims made through the annual return and audit. Following are the documents and the significance thereof with respect to GST Annual returns and Audits.
- Documentation for outward supply:
- Tax Invoices/Bill of Supply:
Tax Invoices issued by a registered person should be kept on record. The Invoices should have been issued in accordance with the provisions of CGST Act. A registered person needs to ensure that the invoices are serially numbered and are containing all the requisites as described under Rule 46 to the CGST Rules 2017. In the sequence if there are any missing invoices, the reason for the same needs to be documented.
- Debit Note:
Any Debit note issued in accordance with Section 34 of the CGST Act 2017, the same needs should contain all the requisites as mentioned under Rule 53 of the CGST Rules 2017. The details of debit notes issued and the corresponding Invoice/Invoices against which such Debit note are issued should also be duly documented.
- Credit Note
Credit note is a tax document under the GST Laws. Thus, any credit note issued in accordance with the provisions of Section 34 of the CGST Act 2017, containing all the requisites as per Rule 53 of the CGST Rules 2017 should be kept on record. Also, the log of Invoice/Invoices against which such Credit note is issued shall be maintained. In case there are any commercial Credit Notes issued, wherein no tax adjustment was made, the same shall be also recorded and documented separately.
- Receipt Vouchers/Refund Vouchers/ Payment vouchers:
Receipt vouchers issued in case if any advances were received to be kept on record. Also, if an invoice is duly issued prior to end of relevant financial year, against such receipt voucher, then the same with a cross reference shall be maintained.
Refund Vouchers are required to be issued, if any advance received are refunded back and wherein no Invoices will be issued subsequently. In this case, in order to claim refund of tax paid if any on receipt of advances, this document will be pivotal.
Payment vouchers and self-Invoice would be required to be maintained for all the transactions for which the payment is made to the vendor and on which tax was liable to be paid under the reverse charge mechanism. For ensuring the tax payments under the reverse charge mechanism, the payment vouchers would help to substantiate the fact that the payment has been duly made.
- Documentation for Inward supplies: The under mentioned documents are relevant and important from the perspective of correctness of claim of Input tax credits.
- Purchase Invoices: As per the provisions of Section 16(2), one of the basic conditions to avail ITC, is that the registered person should be possession of Tax Invoice. Besides this, it would be pertinent to note that, only an invoice issued in terms of provisions of section 31 of the CGST Act and the rules relating thereto, would be treated as a valid invoice for permissible claim of ITC.
- Debit note or Credit Notes received: Any registered person who is in receipt of Debit Note, where in the inward value of supply has been increased and on account of which ITC has been availed, the retention of such record is relevant. Also, in the instance when a registered person has received credit note, the same has caused reversal in Input tax credit availed. Thus, the credit note, so received should be duly documented.
- Bill of Entry and Self Invoice: Where the ITC has been availed based on Bill of Entry then the Bill of Entry which containing the GSTIN of the Importer and the IGST amount duly specified therein shall be duly kept on records. There might be a possibility that these documents are in the possession of the Custom House Agent, whereas the tax payment was made online, but document was not collected. In such circumstances it is essential to keep the Bill of Entry on record.
Self-Invoices generated for payment of tax on transactions liable for tax under the reverse charge basis, shall be duly kept on record. In cases where the inward supply is liable to be taxed on reverse charge basis, the ITC is available only after payment of tax in cash, and the document prescribed under law, for claiming the ITC in such cases is the self-invoice, prepared by the recipient of supply of goods or services or both.
- Other important documents for GST Audit:
- Management representation letter: A GST Auditor shall be very much careful in obtaining necessary Management representations where him and the management are not in agreement as regards to the tax positions adopted. Besides Part B of the audit report there is no specific way in which the qualifications for an audit can be given. Thus, the Management representation letter will be very much necessary in such cases. As far as interpretation of law is concerned, the management may have a different opinion than that of the auditor. Thus, in such case this document would be very much pivotal.
- Annexure to GST Audit: The form GSTR-9C covers several reconciliations. For explaining the differences there is a separate tab provided as well. However, there might be *certain differences arising due to some business scenarios which would be difficult to capture in the given space. May be if the working needs to be shown or an arithmetic adjustment is to be shown. In such case, the Annexures may be attached in Excel/Word/PDF document format which would sufficiently prove to be useful for providing necessary explanation for reconciliation differences.
- Working papers in relation to GST Audit: From a auditor and a managements perspective it is very important to keep the documentation ready, which has been used for conducting GST Audit. The base working files through which the reconciliations have been prepared needs to be maintained properly. The working files would be more useful in the situation where the reconciliation has to be revisited during any future litigation or adjudication.
Disclaimer: The views provided above are based on our understanding of the GST Laws, Rules and Regulations. The adjudicating or Judicial Authorities may or may not agree with the views expressed above.