GST Audits, Investigations & Summons: Your Informed and Strategic Moves

A notice from the GST department for an audit, investigation, or a summons can be a source of significant anxiety for any business. These are not routine inquiries; they are formal proceedings that can scrutinize every aspect of your operations, potentially leading to severe penalties, protracted litigation, and significant business disruption.With a proactive and strategic legal defense, these challenges can be managed methodically. AMLEGALS provides expert legal representation for businesses facing GST audits and complex GST investigations, including those initiated by the Directorate General of GST Intelligence (DGGI). Our goal is to protect your rights, mitigate your risks, and navigate you through the entire process with clarity and confidence.

Decoding the Threat: Understanding Audits, Investigations, and Summons

While often used interchangeably, these three proceedings are distinct in their scope, intensity, and legal implications.

1. GST Audits: The Compliance Deep-Dive

A GST audit is a structured examination of your financial records to verify the correctness of your declared turnover, taxes paid, refunds claimed, and Input Tax Credit (ITC) availed.

• Departmental Audit (Section 65): Conducted by tax authorities to ensure overall compliance. It is a broad review of your GST records.
• Special Audit (Section 66): Ordered by an officer when a case’s complexity or valuation issues warrant a detailed examination by a nominated Chartered Accountant or Cost Accountant. This signals a higher level of scrutiny.

2. GST Investigations: Targeting Suspected Evasion

A GST investigation is a far more serious undertaking, launched when there is reason to believe a significant tax evasion or fraudulent activity has occurred. These are typically handled by specialized wings like the DGGI.

• Scope: The DGGI investigation process is extensive and can involve surprise visits, search and seizure operations, and recording of statements from key personnel.
• Triggers: Often initiated based on intelligence about fake invoicing, fraudulent ITC claims, circular trading, or deliberate misclassification of goods/services.

3. GST Summons: The Legal Call to Testify

A GST summons under Section 70 of the CGST Act is a legal instrument compelling a person’s attendance to give evidence or produce a document.

• It is not optional: Failure to comply with a GST summons is a punishable offense.
• Legal Implications: Statements recorded during a summons are admissible as evidence in legal proceedings. Providing inaccurate or misleading information can have severe consequences. Learning how to respond to a GST summons correctly is your first line of defense.

How We Help During Audit, Summon and Investigation?

We advise strategically after due assessment, analysis to respond  and align in a well informed manner:

1. Initial Consultation: Understanding your specific situation and risks.
2. Document Review: Examining GST returns, invoices, and other records.
3. Drafting Responses: Preparing replies to notices, summons, or audit findings.
4. Representation: Advocating for your business during audits, investigations, or tribunal hearings.
5. Post-Resolution Strategy: Strengthening compliance to prevent future issues.

What NOT to Do During an Inquiry?

Expert legal advice is as much about preventing mistakes as it is about taking the right actions. We guide our clients to avoid these common pitfalls:

• DO NOT ignore a notice or summons. This is the fastest way to escalate the problem.
• DO NOT submit original documents without keeping certified copies.
• DO NOT provide vague, speculative, or informal written replies. Every word can be used against you.
• DO NOT allow key employees to give statements without legal briefing.
• DO NOT attempt to conceal information or manipulate records.

Handling GST Audits, Investigations & Summons: Step-by-Step

Step 1: Responding to a GST Audit/Notice

• Review the notice for details (Sections 65, 66, or 70).
• Identify discrepancies in records and accounts.
• Prepare the required documents and engage legal counsel for representation.

Step 2: Addressing Investigations

• Cooperate with authorities while protecting your rights.
• Provide factual, consistent information to avoid escalation.
• Engage a GST lawyer to ensure legal compliance during the investigation.

Step 3: Handling Summons

• Review the summons to understand its scope.
• Gather relevant documents or information requested.
• Draft a professional, legally sound reply with the help of experienced counsel.

Why AMLEGALS for GST Audits, Investigations & Summons?

• Proven Expertise: We have successfully handled complex audits, investigations, and summons for businesses across industries.
• End-to-End Legal Support: From audit preparation and notice replies to post-audit representation, we cover every aspect.
• Strategic Solutions: Our strategies are customized to your business’s unique circumstances, ensuring the best possible outcome.
• Multi-Industry Experience: Expertise in sectors like e-commerce, manufacturing, real estate, IT/ITES, and more.
• Pan India Presence : We are based in major cities of India with our 9 offices in India and supports in otehr locations with our close associates.

Frequently Asked Questions (FAQs)

• Q1: What is the real difference between a departmental audit and a DGGI investigation? A: A departmental audit is like a thorough health check-up to ensure you’re following the rules. A DGGI investigation is like emergency surgery; it’s initiated based on a strong suspicion of a serious ailment (like tax evasion) and is far more intrusive, with powers of search, seizure, and arrest.

• Q2: Can I be arrested during a GST investigation? A: Yes, under Section 69 of the CGST Act, designated officers have the power to arrest a person if they have reason to believe a serious offense (as specified in the Act, often involving high-value tax evasion or fraudulent refunds) has been committed. This makes expert legal representation during GST investigations absolutely critical.

• Q3: Is a statement recorded during a GST summons binding in court? A: Yes, statements made under a Section 70 GST summons are considered judicial proceedings and are admissible as evidence. It is crucial that any statement is truthful, accurate, and given after careful consideration and legal advice.if an adverse is proved then the statement will not be binding and it will also depend upon the nature of statement and allegations made in a SCN all have to been seen in totality to answer it correctly though.

• Q4: How long does a typical GST audit take? A: A departmental audit is legally required to be completed within three months from the commencement of the audit, extendable by a further period not exceeding six months. However, the entire process, including any subsequent notices and replies, can be lengthy.

Turn a Defensive Position into a Compliant Future

Facing scrutiny from tax authorities can be daunting, but it is also an opportunity to strengthen your internal processes. Partner with AMLEGALS to not only resolve your current GST audit or investigation but also to build a more resilient compliance framework for the future.

• Connect at info@amlegals.com
• Call on Boardline- 91-8448548549