HC set aside final audit report since time period of 30 days to file reply to draft audit report was not given

Simon India Ltd. v. CT and GST Officer, Cuttack-II Circle [2022] 145 taxmann.com 485 (Orissa)

In this case, the petition was filed to quash draft audit report and final audit report on the ground that no opportunity granted to the petitioner to file a reply to the draft audit report. The petitioner submitted that paradoxically, the draft audit report and the final audit report were issued on the same day.

The Honorable High Court noted that as per Section 65 of GST Act, audit shall be completed within a period of three months from the date of commencement of the audit. But, in the instant case, the deadline of three month period had already been crossed and the authorities issued both the draft audit report as well as the final audit report on the same day. Thus, the procedural requirement to give 30 days’ time to file a reply to the draft audit report was not followed. Therefore, the Court held that the final audit report was liable to set aside. However, the extension to complete audit was granted as otherwise it would lead to automatic quashing of draft audit report thereby rendering whole audit futile.