Gujarat HC Leaves HuberGroup’s 8 GST Notices In Place, Finds Audit Report Issued Within 3-Month Limit

The petitioner received notices in Form GST ADT-01 beginning on 27 June 2022 for an audit of FYs 2017-18 to 2019-20 and submitted documents and further information in response.

Further ADT-01 notices followed in November 2022 and February 2024; the latter also covered additional financial years.

The audit was conducted at the petitioner’s place of business on 19 June 2024, and the audit report in Form GST ADT-02 was issued on 2 August 2024.

Eight show-cause notices under Section 74, accompanied by DRC-01 forms, were issued on 2/3 August 2024.

The petitioner challenged the notices and, by amendment, also sought a declaration that the audit was time-barred under Section 65(4) of the CGST Act.

1. Whether the audit report dated 2 August 2024 was issued within the limitation period prescribed by Section 65(4) of the CGST Act

2. Whether the Court should set aside the consequential show-cause notices at the writ stage

Section 65(4) of the CGST Act requires an audit to be completed within three months from its commencement; the Commissioner may extend that period by up to six months for reasons recorded in writing.

Under the Explanation to Section 65(4), commencement is the later of the date on which the registered person makes available the records and documents called for, or the date on which the audit is actually instituted at the person’s place of business.

Section 65(6) requires the proper officer to inform the registered person of the audit findings, while Section 65(7) permits action under Sections 73 or 74 (and, as applicable, Section 74A) following specified audit findings.

Section 107 provides an appellate remedy against an appealable decision or order.

The Court treated the commencement date as governed by the later of the two events specified in the Explanation, rather than by the date on which the petitioner said it had supplied the documents.

Because the parties disputed whether all requested documents had been furnished, the Court relied on the actual institution of the audit at the petitioner’s business on 19 June 2024; the report issued on 2 August 2024 was within three months of that date.

The Court noted that the authorities had not informed the petitioner within a reasonable time which documents remained outstanding, contributing to delay, but held that this did not displace the statutory alternative commencement date or justify quashing the audit report.

It declined to determine the merits of the show-cause notices, leaving the petitioner to respond to them and pursue the available statutory remedy.

The petitioner remained at liberty to respond to the notices and challenge the action through the statutory appellate process.

The writ petition failed and the Rule was discharged.