Audit report in GST can not be issued within 7 days of Notice : High Court

ORDER

1. The petitioner has impugned the audit report dated 31.12.2013 under Section 65[6] of the Karnataka Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017 [for short, ‘KGST/CGST Act’] as per Annexure-E, and for consequential direction to the third respondent to re-adjudicate after extending a reasonable opportunity in terms of Show Cause Notice dated 9-12-2022 [Annexure-D] issued under Section 65[5] of the KGST/CGST Act. Sri. K M Shivayogiswamy, the learned counsel for the petitioner, and Sri. K Hemakumar, the learned Additional Government Advocate, who accepts notice for the respondents, are heard for final disposal in view of the narrow canvass of the petitioner’s grievance.

2. Sri K M Shivayogiswamy submits that the petitioner is extended with opportunity to file books of accounts and the last of the endorsement in that regard is issued on 13.10.2022. The third respondent has issued Notice under Section 65[5] of the KGST/CGST Act on 09.12.2022 and this Notice is received by the petitioner only on 23.12.2022. The third respondent, within seven days there from without reasonable opportunity, has passed the impugned Audit report.

3. Sri K Hemakumar, the learned Additional Government Advocate, drawing the attention of this Court to the observation in the impugned audit report, submits that though the opportunity is extended to the petitioner to respond to the observations on 09.12.2022, the petitioner has not filed response and therefore the petitioner cannot complain of lack of opportunity. However, Sri. K Hemakumar is unable to dispute that this notice is served on the petitioner only on 23.12.2022 and the impugned audit report is within seven days there from.

4. If the petitioner has furnished books of accounts in the month of March 2022 and the final endorsement is issued on 13.10.2022, and if it is undisputed that Notice under Section 65[5] of the KGST/CGST Act is served on the petitioner only on 23.12.2022, this Court must opine that the impugned audit report cannot be said to be after a reasonable opportunity. Therefore, this Court must interfere with the impugned order. At this stage, when queried, Sri. K M Shivayogiswamy submits that the petitioner would respond to the Show Cause Notice dated 9-12-2022 within two weeks from the date of receipt of a certified copy of this order. In the light of the above, the following:

5. The petition is allowed-in-part, quashing the impugned Audit Report dated 31.12.2022 [Annexure-E]. The petitioner is reserved liberty to file its response with the third respondent on or before 27-2-2023 and for the purposes of Section 65[6] of the KGST/CGST Act, the prescribed thirty days shall be computed from 27-2-2023.