HUBERGROUP INDIA PRIVATE LIMITED vs UNION OF INDIA
- Court
- Gujarat High Court
C/SCA/14772/2024 CAV JUDGMENT DATED: 23/10/2026
(GJHC240670742024)
Reserved On : 12/10/2026
Pronounced On : 23/10/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO.14772 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-.
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Sd/-.
================================================================
Approved for Reporting Yes No
a
================================================================
HUBERGROUP INDIA PRIVATE LIMITED
Versus
UNION OF INDIA & ORS.
================================================================
Appearance:
MR. S S IYER(6553) for the Petitioner(s) No. 1
MR ANKIT SHAH(6371) for the Respondent(s) No. 1,2,3,4,5
MR. ARCHIT P JANI(7304) for the Respondent(s) No. 6
================================================================
CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
(1) By way of the present writ petition, the petitioner-Company seeks
to quash and set aside the eight show-cause notices dated
02/03.08.2024, along with the accompanying DRC-01 forms.
Subsequently, by filing Civil Application (for amendment) No.1 of
2026 in the present writ petition, the petitioner-Company sought to
amend the prayer clause to seek a declaration that the audit undertaken
by respondent Nos.3 to 6 in the year 2024 in respect of the Financial
Years (F.Ys.) 2017-18 to 2019-20 was contrary to the provisions of
Section 65(4) of the Central Goods and Services Tax Act, 2017 (for
short, “the CGST Act”), and was consequently time-barred.
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BRIEF FACTS OF THE CASE :
(2) The petitioner-Company is engaged in the manufacturing and
supplying of pigments and printing ink falling under Chapter-32, as well
as other goods falling under Chapter-39 of the GST Tariff.
(2.1) On 27.06.2022, the petitioner-Company received a notice in
FORM GST ADT-01 under Section 65 of the CGST Act for conducting
an audit in respect of F.Ys. 2017-18 to 2019-20.
(2.2) Pursuant thereto, the Manager of the petitioner-Company
appeared for a personal hearing on 12.07.2022 and submitted the
relevant documents, including financial statements, audit reports, Form
26AS, cost audit report, income-tax returns, Forms 3 CD and 3 CB,
GSTR-1, GSTR-3B, GSTR-9, GSTR-9C, an HSN-wise summary
specifying the applicable tax rates, and the trial balance.
(2.3) Thereafter, respondent No.4 sought the documents from the
petitioner-Company, which had already been submitted in physical form
as well as in PDF format. Accordingly, the petitioner-Company once
again forwarded the documents referred to hereinabove to respondent
No.4 by email dated 09.08.2022.
(2.4) Subsequently, the petitioner-Company received another notice in
FORM GST ADT-01 dated 2.11.2022 on 11.11.2022 for conducting an
audit in respect of F.Ys. 2017-18 to 2019-20. The petitioner-Company
appeared before the audit authorities on 30.11.2022 for a hearing and
reiterated that the requisite particulars and documents had already been
furnished to the audit officers.
(2.5) On 15.02.2023, the petitioner-Company submitted its Purchase
Register containing details of the Input Tax Credit (ITC) claimed during
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the period from F.Y. 2017-18 to F.Y. 2019-20. It also reiterated that the
other requisite particulars and documents had already been furnished
by email dated 09.08.2022.
(2.6) Thereafter, another notice in FORM GST ADT-01, dated
09.02.2024, was issued to the petitioner-Company for conducting a
GST audit for F.Ys. 2017-18 to 2022-23.
(2.7) In response thereto, the petitioner-Company, by email dated
15.03.2024, furnished the relevant financial statements, audit reports,
Form 26AS, cost audit reports, income-tax returns, Forms-3 CD and 3
CB, GSTR-1, GSTR-3B, GSTR-9, GSTR-9C, an HSN-wise summary
specifying the applicable tax rates, the trial balance, and the purchase
and sales registers. The authorised representative of the petitioner-
Company also personally visited the office of respondent No.4 and
explained that the data had already been furnished on a pen drive.
Nevertheless, the petitioner-Company once again submitted the
relevant data in response to the notice dated 09.02.2024.
(2.8) During the course of the audit, the petitioner-Company continued
to furnish the particulars and documents sought by respondent No.4
from time to time through emails, with the correspondence continuing
until 07.07.2024. The petitioner-Company also furnished the Capital
Goods Register (CGR) and the Fixed Assets Register (FAR), as
requested by the audit officers.
(2.9) On 23.07.2024, the petitioner-Company received the audit findings
in FORM GST ADT-01.
(2.10) According to the petitioner-Company, the officers of respondent
No.4 declined to accept its written submissions in response to the audit
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observations in physical form. Consequently, the petitioner-Company
forwarded its reply to the audit findings by email dated 31.07.2024 and
also sought an opportunity to explain its contentions in person.
(2.11) On 02.08.2024, the petitioner-Company received, through email,
the audit report prepared under Section 65(6) of the CGST Act in FORM
GST ADT-02.
(2.12) Thereafter, by email dated 02.08.2024, the petitioner-Company
brought to the notice of the audit authorities that it had already
submitted its reply to the audit findings by email dated 31.07.2024. It
further pointed out that no opportunity had been afforded to it to explain
its contentions in person.
(2.13) Thereafter, respondent Nos.4 and 5 issued eight show-cause
notices dated 02/03.08.2024, accompanied by eight DRC-01 forms,
invoking Section 74 of the CGST Act and proposing recovery of the
alleged tax dues, together with applicable interest and penalty.
Aggrieved thereby, the petitioner-Company has preferred the present
writ petition.
SUBMISSIONS ON BEHALF OF THE PETITIONER-COMPANY :
(3) Learned advocate Mr.Iyer, at the outset, has submitted that the
impugned audit report is required to be quashed as it was prepared
beyond the prescribed period of limitation of three months. It was further
submitted that, in view of Section 65(4) of the CGST Act read with the
Explanation thereto, the audit for F.Ys. 2017-18 to 2019-20 ought to
have been completed within the prescribed period of three months from
the date of commencement of the audit.
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(3.1) It is contended that the requisite documents had been furnished
by 09.08.2022 and, therefore, the audit ought to have been completed
within three months thereof, subject to the applicable statutory
provisions. Learned advocate appearing for the petitioner-Company
further submitted that the notice in FORM GST ADT-01 dated
09.02.2024 was contrary to the statutory scheme of Section 65 of the
CGST Act, insofar as it again covered F.Ys. 2017-18 to 2019-20, for
which the requisite records had already been furnished. It was pointed
out that, by email dated 15.03.2024, the petitioner-Company had
specifically informed the authorities that the records pertaining to the
said financial years had already been submitted and duly acknowledged
by the audit group vide its acknowledgment letter dated 15.02.2023. In
the same communication, the petitioner-Company had undertaken to
furnish the data pertaining to F.Ys. 2020-21 to 2022-23 shortly. It is,
therefore, submitted that, in the absence of any specific identification of
the documents allegedly not furnished in 2022, the respondents could
not sustain a general allegation that only partial records had been
submitted or that the documents furnished were insufficient for
conducting the audit.
(3.2) It was thus submitted that the subsequent issuance of notices in
FORM GST ADT-01 dated 02.11.2022 and 09.02.2024 could not cure
the failure to complete the audit within the prescribed statutory period. It
was, therefore, contended that the audit findings and the consequential
show-cause notices dated 02/03.08.2024, insofar as they pertain to
F.Ys. 2017-18 to 2019-20, were liable to be set aside as being contrary
to the statutory scheme and barred by limitation.
(3.3) It was further submitted that the invocation of Section 74 of the
CGST Act was mechanical and unsustainable, inasmuch as the
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petitioner-Company had furnished the requisite documents to the audit
authorities on 12.07.2022 and again by email dated 09.08.2022. It was
contended that the authorities, having failed to proceed with and
complete the audit within the prescribed period, could not subsequently
invoke Section 74 of the CGST Act in August 2024 by alleging
deliberate misstatement or suppression of facts. On the aforesaid
grounds, learned advocate urged that the petition be allowed.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS :
(4) In response to the foregoing submissions and opposing the
present writ petition, learned Senior Standing Counsel Mr.Archit P. Jani
has submitted that the present writ petition is liable to be rejected as the
audit report, as envisaged under the provisions of Section 65 of the
CGST Act, was duly prepared within the prescribed period. He referred
to the Explanation to Section 65 of the CGST Act and submitted that the
petitioner-Company, by way of a wilful misstatement and suppression of
facts, deliberately failed to furnish the requisite documents and
therefore, the audit commenced at the place of business of the
petitioner-Company i.e. place of business on 19.06.2024, and the final
audit report was issued on 02.08.2024. It was further submitted that
therefore, the audit was completed within the period of three months, as
envisaged under Section 65 of the CGST Act.
(4.1) It was thus submitted by the learned Senior Standing Counsel that
the petitioner-Company had failed to provide the other requisite
documents necessary for conducting the audit, despite the issuance of
FORM GST ADT-01. Until the audit report in FORM GST ADT-02 was
issued, the petitioner-Company continued to delay the proceedings. It
was, therefore, contended that the audit was completed within the
period of three months prescribed under Section 65(4) of the CGST Act,
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reckoned from the commencement of the audit at the place of business
of the petitioner-Company on 19.06.2024, after receipt of the requisite
documents. It was submitted that owing to the willful misstatement and
suppression of facts on the part of the petitioner-Company, which came
to light during the audit, the provisions of Section 74 of the CGST Act
were invoked by resorting to the extended period of limitation.
(4.2) It was submitted by the learned Senior Standing Counsel that the
petitioner-Company took more than two years to produce the requisite
documents and furnished the documents pertaining to F.Y. 2017-18 with
the intention of delaying the conclusion of the audit, which commenced
at the place of business of the petitioner-Company on 19.06.2024, as
stated hereinabove. Thus, it was urged that the present writ petition
ought not to be entertained.
ANALYSIS AND OPINION
(5) We have considered the rival submissions advanced by the
learned advocates appearing for the respective parties.
(6) The facts established on record are that the petitioner received
the notice in FORM GST ADT-01 dated 27.06.2022 for conducting an
audit for the F.Ys. 2017-18, 2018-19 and 2019-20. Form ADT-01 dated
27.06.2022 states that the authorities proposed to conduct the audit at
the petitioner's place of business on a date to be intimated after
submission of the documents specified in the enclosed list. The notice
also contains the following recital: “ In case of failure to comply with
these notices, it would be presumed that you are not in possession of
such books of accounts, and proceedings as deemed fit may be
initiated as per the provisions of the Act and Rules made thereunder
against you without making any further correspondence in this regard. ”
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(7) There were two annexures namely, Annexures “A” and “B”,
containing the lists of documents to be furnished by the petitioner.
Annexure “A” contained 13 documents, and Annexure “B” contained
another 13 documents. On 12.07.2022, the representative of the
petitioner-Company appeared before the respondent authority and
submitted the documents. It appears that vide email dated 09.08.2022,
the documents previously submitted by the petitioner-Company were
once again sought. On the same date, the petitioner-Company, vide
email, re-submitted the requisite documents for the financial years
under consideration. A perusal of the e-mail and the documents referred
to therein indicates that the said documents had already been furnished
by the petitioner-Company on 12.07.2022, when its representative
attended the personal hearing, and were once again attached to the
email in PDF format. Upon perusal of the attached documents, it is
revealed that the petitioner-Company had furnished 12 documents each
for the F.Ys. 2017-18 and 2018-19, whereas eight documents were
furnished for the F.Y. 2019-20. Almost three months later, the
respondent authority after almost two months issued a reminder dated
02.11.2022 in Form GST ADT-01, reiterating the same contents.
However, even in the reminder, the respondent again called for
documents that had already been sought in the original Form GST ADT-
01. By email dated 15.02.2023, the petitioner-Company specifically
informed the respondent authority that the relevant details and
documentary evidence had already been submitted on an earlier
occasion.
(8) In the communication dated 15.02.2023, the petitioner-Company
informed the Superintendent, CGST and Central Excise, that various
details had been furnished through emails dated 09.08.2022 and
15.02.2023. The petitioner-Company further stated that the sales and
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purchase details for the F.Ys. 2017-18 to 2019-20 were being submitted
on a pen drive, owing to the voluminous nature of the data. Thereafter,
on 09.02.2024, a third notice in FORM GST ADT-01 was issued, calling
upon the petitioner to furnish the documents and reiterating the earlier
requirements. The only difference was that, in FORM GST ADT-01
dated 09.02.2024, the respondent authority additionally included the
F.Ys. 2021-22 and 2022-23. The petitioner-Company again informed the
respondent authority, through emails, that the documents pertaining to
the earlier F.Ys. had already been furnished and that the documents for
the newly added financial years namely, 2021-22 and 2022-23, would
be submitted shortly. Thereafter, the petitioner-Company sent several
communications and emails attaching the relevant documents for all the
F.Ys. from 2017-18 to 2022-23. The last such e-mail was dated
12.03.2024.
(9) Ultimately, it appears that the audit at the place of business of the
petitioner-Company was conducted on 19.06.2024, and the audit report
was prepared and communicated on 02.08.2024.
(10) The record indicates that by email dated 31.07.2024, the
respondent authority informed the petitioner-Company on the basis of
the audit report dated 02.08.2024. On 02.08.2024, the petitioner-
Company received the audit report under Section 65(6) of the Act in
Form ADT-02 through email. It appears that on 23.08.2024, the
petitioner-Company informed the respondent authority that no
opportunity had been afforded to it to explain its contentions in person.
Thereafter, eight show-cause notices dated 02/03.08.2024 in Form GST
DRC-01 were issued by respondent Nos.4 and 5 to the petitioner-
Company for F.Y. 2017-18, invoking Section 74(1) of the CGST Act and
proposing the recovery of tax along with interest and the imposition of
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penalty. The said notices have been challenged by way of the present
writ petition.
(11) The issue that arises for consideration before this Court in the
present writ petition is whether the audit report dated 02.08.2024 was
issued within the period of limitation prescribed under Section 65 of the
CGST Act or not. In order to answer the issue raised before us, it would
be necessary to examine the provisions of Section 65 of the CGST Act,
which read as follows:
“ 65 . Audit by tax authorities :-
(1) The Commissioner or any officer authorised by him, by way of a
general or a specific order, may undertake audit of any registered person
for such period, at such frequency and in such manner as may be
prescribed.
(2) The officers referred to in sub-section (1) may conduct audit at the
place of business of the registered person or in their office.
(3) The registered person shall be informed by way of a notice not less
than fifteen working days prior to the conduct of audit in such manner as
may be prescribed.
(4) The audit under sub-section (1) shall be completed within a period of
three months from the date of commencement of the audit:
Provided that where the Commissioner is satisfied that audit in respect
of such registered person cannot be completed within three months, he
may, for the reasons to be recorded in writing, extend the period by a
further period not exceeding six months .
Explanation. - For the purposes of this sub-section, the expression
“commencement of audit” shall mean the date on which the records and other
documents , called for by the tax authorities, are made available by the
registered person or the actual institution of audit at the place of business,
whichever is later.
(5) During the course of audit, the authorised officer may require the
registered person, –
(i) to afford him the necessary facility to verify the books of account or
other documents as he may require;
(ii) to furnish such information as he may require and render assistance
for timely completion of the audit.
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(6) On conclusion of audit, the proper officer shall, within thirty days,
inform the registered person, whose records are audited, about the
findings, his rights and obligations and the reasons for such findings.
(7) Where the audit conducted under sub-section (1) results in detection
of tax not paid or short paid or erroneously refunded, or input tax credit
wrongly availed or utilised, the proper officer may initiate action under
section 73 or section 74 1[or section 74A].”
Sub-section(4) of Section 65 of the CGST Act prescribes a period
of three months for the completion of an audit from the date of
commencement of the audit. Under sub-section (2) authorizes the tax
authorities to conduct an audit at the place of business of a registered
person. As per sub-section (3) of Section 65 of the CGST Act, the
registered person is required to be informed of the audit by way of a
notice issued not less than 15 working days prior to the conduct of the
audit. The proviso to sub-section (4) of Section 65 of the CGST Act
further empowers the Commissioner to extend the said period by a
further period not exceeding six months, subject to recording of reasons
in writing. The Explanation to Section 65 of the CGST Act further
defines the expression “commencement of audit” to mean the date on
which the records and other documents called for by the tax authorities
are made available by the registered person or the actual institution of
the audit at the place of business, whichever is later. Thus, the date of
commencement of the audit is determined by reference to the later of
these two events.
(12) In the present case, the first notice in FORM GST ADT-01 for
conducting an audit at the place of business of the petitioner for the
F.Ys. 2017-18 to 2019-20 was issued on 27.06.2022. It is the case of
the petitioner that all the requisite documents were furnished through
email and that correspondence ensued between the petitioner and the
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respondent authorities with regard to the submission of the documents.
Subsequently, a second notice (reminder) in Form ADT-01 was issued
on 02.11.2022, calling upon the petitioner to furnish the documents. We
find that the documents sought under the reminder were identical to
those called for under the original Form ADT-01 dated 27.06.2022. The
petitioner again furnished the documents by email dated 15.02.2023.
Finally, another notice in Form GST ADT-01 was issued on 09.02.2024,
additionally calling upon the petitioner-Company to produce the relevant
documentary evidence for the F.Ys. 2021-22 and 2022-23. The
respondents have contended that the petitioner had not furnished all the
documents called for by the respondent authorities. Ultimately, the audit
commenced at the place of business of the petitioner-Company on
19.06.2024, and the final audit report was prepared by the respondent
authority on 02.08.2024 and communicated to the petitioner through
email as well as by speed post.
(13) The petitioner seeks to have the audit report quashed on the
ground that it was prepared beyond the prescribed period of three
months from the commencement of the audit, even if the last notice in
FORM GST ADT-01 dated 09.02.2024 is taken into consideration. We
do not subscribe to this contention for the simple reason that the
Explanation to Section 65 of the CGST Act provides for two alternative
events for determining the commencement of the audit, with the date of
the later event being decisive. Even if the petitioner's contention that it
had furnished all the requisite documents in time is accepted, the
furnishing of the documents cannot override the statutory requirement
of determining the commencement of the audit by reference to the later
of the two events, namely, the date on which the records and other
documents are made available or the date on which the audit is actually
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instituted at the place of business. The Explanation clarifies that the
date of commencement of the audit is the date on which the records
and other documents are made available or the audit is actually
instituted at the place of business, whichever is later. Since there is a
dispute of fact as to whether the petitioner-Company furnished all the
requisite documents, coupled with the allegation that it deliberately
prolonged the audit proceedings, the date on which the audit was
actually instituted at the place of business provides an alternative basis
for determining the commencement of the audit. The respondent
authorities cannot be compelled to consider the date of submission of
the documents as the date of commencement of the audit when there is
a dispute as to whether all the documents called for under FORM GST
ADT-01 were furnished. However, we are of the opinion that, where a
registered person furnishes documents pursuant to a notice issued
under Section 65 of the CGST Act but some documents remain
outstanding, the tax authorities are required to inform the registered
person of the missing or outstanding documents within a reasonable
time, so that the audit can be completed at the earliest. In the instant
case, the respondents issued three notices in FORM GST ADT-01 but
failed to intimate the petitioner-Company about the missing or
outstanding documents, which contributed to the delay in completing
the audit. However, since the statute provides an alternative basis for
determining the date of commencement of the audit, the Court cannot
set aside the audit merely on the ground that three notices in Form
ADT-01 were issued to the petitioner-Company. Hence, upon
threadbare analysis of facts and the scheme of the Section 65, we are
of the opinion, that the audit report is prepared within the specified of
three months.
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(14) As regards the challenge to the impugned show-cause notices on
merits, we are not inclined to set them aside at this stage. The
petitioner-Company may respond to the notices. The petitioner-
Company also has the remedy of challenging the action before the
appellate authority by filing an appeal under Section 107 of the CGST
Act. Hence, the writ petition fails . Rule is discharged.
Sd/- .
(A. S. SUPEHIA, J)
Sd/- .
(VAIBHAVI D. NANAVATI,J)
*
Bhavesh-[PPS] and Radhika/*
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