A division bench of the Orissa High Court, while considering a petition where the GST department issued the draft and final GST audit report on the same day, has allowed the assesseeto file the reply under section 65(4) of the GST Act.
The assessee, M/s Simon India Ltd, contended that there was no opportunity granted to the Petitioner to file a reply to the draft audit report and paradoxically, on the same day that the draft audit report was issued, the final audit report was also issued.
The GST department commenced the audit exercise on 8th October 2021 but the three months period commenced on 22nd March 2022 when the Petitioner was stated to have submitted the documents called for by the authorities. At this stage, it is necessary to refer to Section 65(4) and Section 65(6) of the Orissa GST Act.
As per the provision, the registered person shall be informed by way of a notice of not less than fifteen working days before the conduct of the audit in Form GST ADT-01. As per Section 65(4), the audit of the registered person shall be completed within three months from the date of commencement of the audit.
A division bench of Chief Justice Dr. S. Muralidhar and Justice M. S. Raman observed that“Perhaps knowing that the deadline of the 3-month period had already been crossed, the authorities issued both the draft audit report as well as the final audit report on the same day, i.e., 30th June 2022.”
“The position would, therefore, revert to the stage, at which the draft audit report was issued on 30th June 2022. However, even if the Petitioner is afforded an opportunity at this stage to file a reply to the above draft audit report, followed by the authorities issuing the final audit report, the original deadline of three months would be crossed on 21st December 2022. If the exercise is not completed by that date, the entire exercise would be rendered futile. Therefore, the following directions are issued by this Court subject to the condition that the Commissioner will by a reasoned order in terms of the proviso Section 65(4) of the OGST Act extend the time for completion of the audit by the maximum permissible further period of six months in terms thereof,” the Court said.
Granting relief to the assessee, the Court directed that (i) the Petitioner will file its reply to the draft audit report accompanied by all the documents that the Petitioner wishes to rely on not later than 28th November, 2022, (ii) after considering the reply of the Petitioner, the final audit report will be issued by the Opposite Party Department under Section 65 (6) of the OGST Act not later than 21st December, 2022.
Regarding the validity of the draft report, the Court added that “It is reiterated that the above directions will be subject to the Commissioner granting extension of time for the issuance of the final audit report in terms of the proviso to Section 65(4) of the OGST Act. In other words, if such extension is not granted, then even the draft audit report (Annexure-1) would stand automatically quashed.”
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