14 Observations/Qualifications Remarks to be made by Auditor in GSTR9C

Before reading Observations/Qualifications Remarks to be made by Auditor in GSTR9C, let us understand the difference between the word ‘observation’ and ‘qualification’.

1. Observation: The word ‘observation’ has not been defined under the CGST Act or under the Standards of Auditing issued by the ICAI. Therefore, dictionary meaning would have to be taken. As per the Law Lexcion, authored by P Ramanatha Iyer, observation means ‘view’ or ‘remark’.

2. Qualification: The word ‘qualification’ has not been defined under the CGST Act. As per SA 705 issued by the ICAI, the Auditor shall express a qualified opinion when:

(a) The Auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements; or

(b) The Auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the Auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive.

Therefore, while certifying Form GSTR 9C the Chartered Accountant should take utmost care in reporting a matter as an ‘observation’ or as a ‘qualification’.

1. Availing Input Tax Credit not reflecting in GSTR-2A

Registered Person has availed Input tax credit in respect of following invoices or debit notes, the details of which have not been uploaded by the suppliers in GSTR-2A.

(The Auditor can also provide Invoice Wise/Consolidated Details of Invoices not appearing in GSTR 2A)

2. Input Tax Liability pertaining to FY 17-18, reflecting in Returns of FY 18-19.

Registered Person has availed Input tax credit belonging to FY 17-18 in GSTR 3B for FY 18-19.

3. Output Tax Liability pertaining to FY 17-18, reflecting in Returns of FY 18-19.

Registered Person has disclosed Output Tax Liability belonging to FY 17-18 in GSTR 3B for FY 18-19.

4. Reversal of ITC on account of non-payment of consideration within 180 days 

Registered Person has not provided us aging of creditors, therefore we are not able to comment regarding compliance of Second & Third proviso to Sec. 16(2) of the Central Goods & Services Tax Act, 2017. Further Interest payable (if any) as specified in Rule 37(3) of the Central Goods & Services Tax Rules, 2017 can’t be quantified.

5. Availment of ITC on Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples

Registered Person has availed ITC on Goods destroyed in fire.

6. Non Deposit of GST on Advance received for supply of service.

Registered Person has not paid GST on Advance received for supply of service.

7. Non Maintenance of Stock Records

Registered Person has not maintained proper stock records as required u/s 35 of the Central Goods & Services Tax Act, 2017.

8. Availment of ITC on Goods/Services used for personal consumption

Registered Person has availed Input tax credit in respect of Goods/Services used for personal consumption. Further in absence of proper records we are unable to comment on quantum of reversal and GST interest

Note: If the same have been quantified from records available but ITC not reversed, the resultant Tax Liability & Interest payable can be reported accordingly in Tabular format.

9. Availment of ITC on Goods/Services Ineligible/blocked Credits as per Section 17(5)

Registered Person has availed Input tax credit in respect of blocked Credits as per Section 17(5). Further in absence of proper record/bifurcation of Eligible Credits, Ineligible/blocked Credits & Common Credits for exempt v/s. taxable supply we are unable to comment on quantum of reversal and GST interest.

Note: If the same have been quantified from records available but ITC not reversed, the resultant Tax Liability & Interest payable can be reported accordingly in Tabular format.

10. Short/Non Payment of interest on account of late filing of GSTR-3B

Registered Person has made Short Payment of interest on account of late filing of GSTR-3B.

Registered Person has not made payment of interest on account of late filing of GSTR-3B.

11. Non Reconciliation of GSTR-1 & GSTR-3B

Registered Person has not made proper Reconciliation of GSTR 3B and GSTR 1.

12. Non Reconciliation of Sales and tax liability as per GSTR-1 & Sales and tax liability as per Audited Financials

Registered Person has not made proper Reconciliation of Sales and tax liability as per GSTR-1 & Sales and tax liability as per Audited Financials.

13. Non Reconciliation of Sales and tax liability as per GSTR-3B & Sales and tax liability as per Audited Financials

Registered Person has not made proper Reconciliation of Sales and tax liability as per GSTR-3B & Sales and tax liability as per Audited Financials.

14. Non Deposit of GST on Reverse Charge

Registered Person has not deposited GST as per Reverse Charge.

Disclaimer : Please note that the list is inclusive and not exhaustive

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