The Office of the Commissioner of State Tax, Maharashtra, has issued comprehensive Instructions No. CST/ACST/HQR-05/GST-Audit/2023-24/Guidelines/B. 85 dated October 30, 2026 on the selection of GST Audit cases for the Financial Year 2023-24. The Instructions, issued with the approval of the Hon’ble Commissioner of State Tax, Maharashtra, mark a significant shift in the methodology for selecting cases for audit under Section 65 of the GST Act, from a risk-based selection to a risk-assessment-based selection.
Background and Rationale
The Instructions build upon the audit framework laid down in Internal Circulars 09A of 2023 (dated 22.12.2023), 04A of 2024 (dated 24.05.2024), 10A of 2024 (dated 29.11.2024) and 7A of 2025 (dated 03.11.2025), which together prescribe a two-tier mechanism for selection of audit cases through centralised data analytics and field-level intelligence under the Local Importance category.
A departmental review of audit work for FY 2022-23 revealed several shortcomings affecting the efficiency, effectiveness and quality of audit outcomes. These included inadequate desk reviews and audit plans prepared without requisite diligence, loss of track of identified issues during proceedings, routine and unfocused requisition of records from taxpayers without linkage to identified issues, delegation of verification responsibilities to taxpayers, recommendation of Local Importance cases on minor GSTR-1/GSTR-3B mismatches involving revenue below ₹5 lakh, delays in commencement of audits leading to last-minute Audit Monitoring Committee proceedings, and inadequate involvement of Deputy Commissioners in charge of Audit Units.
Key Features of the New Framework
Pool-based allocation with mandatory desk review: Centrally selected cases will no longer be directly assigned to specific desks. Instead, a pool of cases with verifiable potential risk will be made available to each Audit Division. Audit Units shall undertake a detailed desk review, examining sectoral trends, past audit cases, intelligence inputs and risk indicators provided by the Economic Intelligence Unit (EIU), along with risk analysis available on BIFA, the E-Way Bill MIS portal, earlier show cause notices, supply chain analysis and open-source information, before recommending a case for audit.
Monetary thresholds for recommendation: Cases shall be recommended for audit only where the revenue risk exceeds ₹2 crore in the Mumbai Metropolitan Region (MMR) and Pune Metropolitan Region (PMR), and ₹1 crore in the rest of Maharashtra. This risk must arise from parameters other than routine return-scrutiny parameters, a list of which is enclosed as Annexure-A to the Instructions. Routine discrepancies may be included only as additional issues, and any unaddressed risk in cases not selected for audit shall be referred to the jurisdictional officer.
Centralised scrutiny and approval: Recommendations shall be submitted by the Joint Commissioner (Audit) through the PRAISE platform in the format prescribed at Annexure-B, following a procedure similar to that for enforcement cases. A Central Selection Committee shall meet every Tuesday and Friday to examine proposals and shall approve only those that are complete, identify specific and clearly articulated audit issues, and substantiate revenue risk through supporting analysis.
Cross-zone allocation for objectivity: For MMR and PMR, the initial pool shall be allocated on a criss-cross basis, with each Audit Division receiving cases pertaining to another Zone, as per Annexure-C, to ensure objective and balanced selection.
Balanced sectoral representation: The pool shall indicate sector-wise distribution, including the total number of cases in each sector and the proportionate number to be recommended, to prevent disproportionate selection from a single sector or limited sectors.
Strengthened supervisory accountability: Presentations before the Central Selection Committee shall be made by the concerned Deputy Commissioner only. A draft FORM GST ADT-01, specifying only those records directly relevant to the identified risk areas, shall accompany each proposal. Approved issues and risk areas shall be necessarily incorporated into the audit plan.
Regulated audit visits: The Zonal Additional Commissioner is authorised to approve audit visits for up to 30 per cent of the total cases selected for audit in the Zone. Visits beyond this limit shall require approval of the Central Committee, and no visit shall be undertaken without such approval.
Timelines and First Lot
The first lot of 3,258 cases, identified on the basis of specified risk parameters detailed in Annexure-D along with corresponding audit objectives, has been distributed to the respective Audit Divisions and Units. Audit Divisions shall complete the desk review and submit recommendations within 15 days from the date of issuance of the Instructions. Each Audit Division is expected to recommend approximately 10 per cent of cases from the first lot, based on the findings of the desk review and merit of the identified risk areas.
The Instructions can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/11/FINAL-GST_AUDIT_SELECTION-GUIDELINES-FOR-FY-_2023-24-30.10.2026.pdf
