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Gst audit

ANANTHAN (Business) (57 Points)

05 January 2019

If Have GSTN in 5 States, each state having aggregate turnover 1Cr, whether gst audit applicable or not.

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3 Replies

CA Vijeta Nathani (Chartered Accountant) (505 Points)
Replied 05 January 2019

Section 35(5) “every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed”.

Rule 80(3) of the CGST Rules “every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of the audited annual accounts and a reconciliation statement, duly certified, in GSTR 9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner”.

Lets answer the above question analysing the section and rules applicable,

Section 35(5) commences with the expression “every registered person whose turnover during a financial year exceeds the prescribed limit” whereas the relevant Rule 80(3) uses the expression “every registered person whose aggregate turnover during a financial year exceeds two crore rupees”.

It must be noted that the word turnover has not been defined whereas the expressions aggregate turnover has been defined. Aggregate turnover is PAN based while turnover in a State / UT is similarly worded except to the extent that turnover in a State / UT is limited to a State.

It is therefore, reasonable to interpret that the word turnover used in section 35(5) ought to be understood as aggregate turnover. Hence, it can be said that for applicability of GST audit aggregate turnover need to be seen than turnover of a individual state.

In the present case, the registered person is required to get GST audit done even though his turnover in each state is less than Rs.2.00 Crore but aggregate turnover exceeds Rs. 2.00 Crores.