A GST audit checks a registered business’s records; an assessment or demand process determines tax liability under a particular statutory route. An audit can lead to further action, but an audit finding is not automatically a tax demand or assessment order. Return scrutiny, departmental audit, special audit, assessment and annual-return reconciliation are separate procedures under India’s GST law.
First, identify which GST process you are dealing with
These terms are not interchangeable. The form number and statutory section on a notice are important because they signal what the tax authority is asking you to do and what may happen next.
As an Amazon Associate I earn from qualifying purchases.
- Return scrutiny (CGST Act section 61): An officer checks a return and related particulars, then may ask the registered person to explain discrepancies.
- Departmental audit (section 65): An authorized tax officer examines a registered person’s records and compliance.
- Special audit (section 66): During another proceeding, an eligible senior officer may direct an audit by a chartered accountant or cost accountant nominated by the Commissioner, subject to statutory conditions and prior approval.
- Assessment or determination: The Act provides several routes to assess tax or determine a demand. The applicable route depends on the facts and statutory conditions; “assessment” is not one single procedure.
Annual return filing and GSTR-9C reconciliation are different again: they are compliance filings, not notices opening a departmental or special audit.
Recommended Free Tools
How the procedures compare
| Process | Who initiates it and why | What the business is asked to do | Notice and timing | What it can produce | Does it determine tax immediately? |
|---|---|---|---|---|---|
| Return scrutiny Section 61 |
The proper officer checks returns and related particulars for discrepancies. | Explain the discrepancy and provide supporting information. | ASMT-10 communicates the discrepancy; the rules specify a response period of no more than 15 days. The Act describes the consequence of a missing or unsatisfactory explanation by reference to 30 days or any further period allowed. See the Assessment-Audit Rules and CGST Act. | If the explanation is accepted, no further action is taken on that discrepancy; otherwise, the officer may pursue an appropriate further process. ASMT-11 is the reply and ASMT-12 communicates acceptance. | No. Scrutiny may lead to another statutory process. |
| Departmental audit Section 65 |
The Commissioner or an officer authorized by general or specific order audits a registered person. | Give access to records, provide information and assist with verification of matters such as returns, turnover, tax rates, exemptions, input tax credit and refunds. | At least 15 working days’ advance notice is required. The audit ordinarily concludes within three months of commencement; the Commissioner may extend it by up to six months for recorded reasons. ADT-01 is the notice. See the CGST Act and Assessment-Audit Rules. | The taxpayer is to be informed of findings, rights and obligations, and reasons within 30 days after conclusion. ADT-02 communicates findings. | No. Findings may prompt later tax action, but are not automatically a demand order. |
| Special audit Section 66 |
During scrutiny, inquiry, investigation or another proceeding, an Assistant Commissioner or higher officer may invoke it in specified circumstances, with prior Commissioner approval. | Cooperate with the audit by a chartered accountant or cost accountant nominated by the Commissioner; the taxpayer must have an opportunity to be heard on audit material proposed for use against it. | The report is due within 90 days, with a possible further 90-day extension. ADT-03 directs the audit and ADT-04 communicates findings. See the CGST Act and Assessment-Audit Rules. | The audit report and findings may inform the proceeding in which the special audit was directed. | No. Any tax determination is a separate matter under the applicable law. |
| Assessment or demand | The Act provides different mechanisms, including provisional, best-judgment and summary assessment, as well as demand provisions for tax not paid or short paid, erroneous refunds, or wrongly availed or utilized input tax credit. | Depending on the route, the business may need to file information, explain its position, or respond to a notice proposing tax, interest or penalty. | There is no single notice form or deadline for all routes; these depend on the provision, facts and operative law for the tax period. For demand matters, check the applicable notice, statute and rules. See the CGST Act. | A statutory order may determine liability. Under the provisions cited in the Act text, a show-cause process and opportunity to make representations precede an order; section 75 addresses hearings and the contents and scope of an order. | This is the process that can determine liability, subject to the particular statutory route. |
The Act requires at least 15 working days’ notice before a section 65 audit. Its wording is: “The registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.”
#1 Best Overall
What happens after a GST audit?
The officer communicates the audit findings and the reasons for them. A discrepancy can lead to further proceedings, including action to determine tax, but the next step depends on the facts and the relevant statutory provision. An audit does not, by itself, establish that tax is due or that every finding becomes a demand.
For a demand matter, sections 73 and 74 in the linked CBIC-hosted Act text provide for a show-cause process and an opportunity to make representations before an order. Section 75 addresses, among other things, a hearing when requested in writing or when an adverse decision is contemplated, and requires an order to state relevant facts and its basis. The demand cannot exceed the amount or grounds stated in the notice. These provisions do not make an audit response a substitute for a demand response.
Does every business need a separate GST audit?
No. A departmental audit under section 65 is initiated by the tax authority; it is not an annual requirement for every business to commission a separate GST audit from a chartered accountant or cost accountant. A special audit under section 66 is also a distinct authority-directed procedure, not a routine annual filing.
GSTR-9C is a reconciliation statement, not an audit order or a finding that a business has been audited by the tax department. CBIC Circular No. 246/03/2025-GST describes the post-1 August 2021 requirement for registered persons whose aggregate turnover in a financial year exceeds ₹5 crore to furnish a self-certified GSTR-9C with the annual return. It reconciles supplies reported in the annual return against audited annual financial statements. The threshold and filing obligation must be applied to the relevant financial year, taxpayer category and any applicable exceptions or later notifications. See the CBIC circular and CGST Rules, amended Part A.
How to respond to ASMT-10, ADT-01 or another notice
Do not treat every GST communication as an audit or demand. Start by identifying the document and its legal basis, then work to the deadline stated in the notice and applicable law.
- Confirm the issuer and document details. Check the issuing authority, document identification details and GSTIN.
- Read the tax period and legal basis. Note the period, statutory section and form number. ASMT-10 is a scrutiny discrepancy notice; ADT-01 is a departmental audit notice. Neither is interchangeable with a demand show-cause notice.
- Identify what response is required. Determine whether the authority seeks records, an explanation of a discrepancy, access for an audit, or a response to a proposed demand or other decision.
- Calendar the response date and submission method. Use the notice’s instructions alongside the governing provision; do not assume a deadline for one form applies to another.
- Support each answer with records. Gather the relevant returns, ledgers, invoices, reconciliations and computations, and connect each document to the point it addresses.
- Get advice where the stakes warrant it. For a live notice involving tax, interest, penalty, limitation or appeal rights, consult a qualified GST practitioner or lawyer. The effect of payment, reconciliation or a written response depends on the statute and facts; none automatically closes every proceeding.
Check the demand provision and time limits for the tax period
Do not rely on a generic “three years versus five years” summary to decide which demand provision applies or calculate a deadline. The CBIC-hosted Act text linked here displays sections 73 and 74 but does not display section 74A, so that text alone does not resolve the applicable provision or transition rules for every period. Before relying on a limitation calculation, check the operative Act amendment, its commencement notification and relevant rules or circulars for the specific tax period and alleged conduct.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
