At the outset, it can be inferred from the heading to Part V of FORM GSTR-9C that the auditor only has a recommendatory power while furnishing his report. Any recommendations given by the auditor may or may not be acceptable to the registered person. If it is acceptable, the payment of tax is to be made by the registered person.
However, if it is not acceptable then the question arises as to how the auditor resolves the issue. At this juncture, the auditor needs to exercise his professional diligence, skill, legal knowledge and care in determination of any additional tax liability which in his opinion, may be payable by the registered person. The registered person has an option to accept, reject or partially accept the recommended additional tax liability. In line with such recommendations though not explicitly stated anywhere in the relevant Form or GST laws–
- the registered person can choose to make the payment of the additional tax liability in full or inpart;
- the registered person can even choose to reject the complete recommendations of the auditor and not make the payment atall.
Before an auditor ventures into recommending any additional tax liability due care, caution and diligence must be exercised. For instance, in respect of commodity classification based on HSN if an auditor believesthattherearetwopossibilitiesthenhemaychoosetoplace reliance on an expert opinion obtained by the registered person. In such a situation a proper disclosure may suffice.
However, when looked at from the perspective of the Government, the recommendation shall form the foundation for an effective show cause notice and enquiry into the affairs of the registered person.