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Clause 27(a) of Form 3CD requires reporting on the CENVAT credit availed or utilized during the previous year, its treatment in the profit and loss account, and the outstanding balance in the accounts. However, since excise duty was subsumed under GST from July 1, 2017, this requirement now applies only to assessees dealing in specific products like petroleum and tobacco. The ICAI's Tax Audit Guidance Note clarifies that while Clause 27(a) in the notified form refers only to CENVAT credit, the e-filing utility extends this to GST Input Tax Credit (ITC), even though this is not specified in the notified form. As a result, it can be argued that this clause may not apply to any assessee,a view supported by the ICAI.

Clause 27(b) requires reporting with regard to prior period items of expenditure debited to the P&L account or income credited to the P&L account.

Additionally, Clause 27 does not require tax auditors to assess whether the accounting treatment of CENVAT credit or ITC — including the opening balance, credit availed, credit utilized, and closing balance — complies with Generally Accepted Accounting Principles (GAAP). However, if the treatment is improper, auditors should express a qualified opinion on the truth and fairness of the accounts in Form No. 3CB. Furthermore, auditors are not required to address the taxability or deductibility of CENVAT credit or ITC. Clause 27(b) does not apply to assessees using the cash system of accounting.

The tax audit checklist on Clause 27 of Form 3CD is as below:

Tax Audit Checklist for Clause 27(a)of Form No.3CD

Tax Audit Checklist for Clause 27(b) of Form No.3CD

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