What does the Section Say?

Section 66 provides for a special audit when the officer believes that the value declared or ITC claimed is not correct or when the nature of business is complex. With approval from a higher authority, the taxpayer may be directed to get accounts audited by a nominated Chartered Accountant or Cost Accountant.

The audit is conducted by the nominated professional, and the expenses are borne by the government. The auditor examines books, records, transactions, and tax positions and submits a report to the department.

The taxpayer is given an opportunity to explain the findings before any adverse action is taken. Based on the report, proceedings under Sections 73 or 74 may be initiated if tax short payment or wrongful ITC is identified.

This provision assists the department in cases involving complicated accounting issues or substantial revenue implications.

Red Flags That Frequently Lead to Special Audit

Practical View of GST Professionals

In actual practice, Special Audits are relatively rare and are usually reserved for:

1. Large taxpayers.
2. Cases involving significant revenue implications.
3. Complex valuation or ITC matters.
4. Situations where departmental officers lack the technical expertise to verify the correctness of accounts.

Many Special Audit cases eventually result in proceedings under Sections 73 or 74 (or corresponding demand provisions under the amended law) if discrepancies are established.

Example

A large business operates through multiple branches with complex valuation arrangements. The officer orders a special audit to verify tax compliance.

Key Points

• Applicable in complex cases.
• Approval of higher authority required.
• Conducted by nominated CA or Cost Accountant.
• Cost borne by government.
• May result in demand proceedings.

One-Line Summary

Section 66 allows a special audit by an independent professional in complex GST cases.