2026-VIL-1212-GUJ
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SGST High Court Cases

GST – Audit by tax authorities - Limitation for completion of audit under Section 65(4) of the CGST Act, 2017, Determination of commencement of Audit – Petitioner received notice in Form GST ADT-01 for audit of three financial years, furnished the documents by personal appearance and by email - While the audit was conducted at its place of business about two years after the first notice and the audit report was issued within about six weeks thereafter - SCNs under Section 74 were issued on the basis of the audit and Petitioner contended that the audit report was prepared beyond the period of three months from commencement of audit and that the SCNs were consequently time-barred - Respondent contended that the Petitioner did not furnish all the documents and delayed the audit, so that the audit commenced at its place of business and was completed within three months - Whether the audit report was issued within the period prescribed under Section 65(4) of the CGST Act - HELD - The Explanation to Section 65(4) provides two alternative events for determining commencement of audit, namely the date on which the records called for are made available or the actual institution of audit at the place of business, whichever is later. Even if the Petitioner's contention that it furnished all the documents in time is accepted, furnishing of documents cannot override the requirement of reckoning the later of the two events - Since there is a dispute of fact whether all documents were furnished, the Respondent cannot be compelled to treat the date of submission of documents as commencement. Where a registered person furnishes documents under a notice and some remain outstanding, the tax authorities are required to inform the person of the missing documents within a reasonable time so that the audit can be completed early, and the Respondent failed to do so despite three notices, which contributed to delay. The Court cannot, however, set aside the audit merely because three notices were issued, as the statute provides an alternative basis - Audit report held to be prepared within the period of three months from commencement of audit – Ordered accordingly - Challenge to SCNs under Section 74 of the CGST Act, 2017 in writ jurisdiction on merits - Petitioner challenged the SCNs issued consequent to audit and contended that the invocation of Section 74 alleging wilful misstatement and suppression was mechanical - Whether the SCNs should be set aside at the stage of show cause - HELD - The Court is not inclined to set aside the SCNs on merits at this stage, as the Petitioner may respond to the notices and also has the remedy of appeal under Section 107 of the CGST Act - The writ petition fails.
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