Facts: M/s. Simon India Ltd. challenged that the Head of Audit Team-1, CT & GST Circle, CU-II, Cuttack issued both the draft audit report as well as the final audit report on the same day, i.e., 30th June, 2022,and the Petitioner was not granted any opportunity to file its reply in accordance with Rule 101(4) of OGST Rules, 2017.The audit exercise commenced on 8 th 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.
Issue: Can Department Issue Draft Departmental Audit Report and Final Audit Report on same day without giving opportunity of being heard to the Auditee?Can such Audit be completed after 3 months without extension approval from Commissioner?
Held:
Extension was not granted by the Commissioner
Violation of Principles of Natural Justice
Minimum 30 days gap should ne there in issue of Draft Audit Report and Final Audit Report
The registered person’s audit must be finished in accordance with Section 65(4) three months after the audit’s start date.
Auditor should finalise the findings of the audit after due consideration of the reply furnished.
The High Court Ordered:
(i) The Petitioner will file its reply on not later than 28th November, 2022 to the draft audit report accompanied by all the documents that the Petitioner wishes to rely.
(ii) 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, After considering the reply of the Petitioner.
Section 65 (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.
Section 65(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.
Title-Simon India Ltd. Versus CT and GST Officer, Cuttack-II Circle, Cuttack and another
Court-ODISHA HIGH COURT
Date-09/11/2022
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CA Parvendra Rana
Comment: