IMPORTANT POINT
The commencement of audit under the GST Act is defined by the date documents are made available, and the audit must be completed within three months from that date.

JUDGMENT :

The challenge raised in this writ petition is against the show cause notices issued under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017/ Kerala State Goods and Services Tax Act, 2017 (for short, 'GST Act') apart from a final audit report dated 08.07.2024.

2. Petitioner is conducting a jewellery by the name 'Chungath Jwellery' and is an assessee under the GST Act. For the period between 2017-18 to 2021-22, petitioner's establishment was subjected to an audit under Section 65 of the GST Act. The statute prescribes that the audit should be completed within three months from the date of its commencement. The contention raised by the petitioner revolves around the non-compliance with the period stipulated for completing the audit. According to the petitioner, the show cause notices now issued and the final audit report filed based on an audit that was not completed within the time prescribed, has no legal basis and is therefore liable to be quashed.

3. A statement has been filed on behalf of the respondents stating that the audit was completed within three months from the date of its commencement as stipulated in the Explanation to Section 65(4) of the GST Act. According to the respondents, on 09.04.2024, in response to a direction to produce the documents, petitioner made the documents available on 06.05.2024 and hence the final audit report dated 08.07.2024 is within time.

4. Sri.Joseph Markos, the learned Senior Counsel, instructed by Sri. Abraham Joseph Markos, the learned counsel for the petitioner submitted that the audit was proposed to be commenced on 10.01.2024. However, since the records sought for were given on 19.02.2024, the commencement of audit gets extended. According to the Senior Counsel, the final audit report dated 08.07.2024 is beyond the period contemplated by the statute even when reckoned from the extended period. It was also submitted that the audit enquiry notice as contemplated under Rule 101 of the Kerala Goods and Services Tax Rules, 2017 was issued on 07.03.2024 and therefore under no circumstances can the commencement be extended before that. The learned Senior Counsel further submitted that the draft audit report is stated in Ext.P9 as having been prepared on 04.05.2024, as seen from Ext.P9, which itself indicates that the date of completion of the audit would certainly have been much before that.

5. Smt.M.M.Jasmine, the learned Government Pleader, on the other hand, submitted that the respondents received all the documents from the petitioner only on 06.05.2024 and hence the completion of the audit need to have been carried out only within three months from the said date. It was also submitted that from Ext.P5 itself, it is evident that petitioner had submitted additional documents only along with the said communication dated 09.04.2024 and therefore viewed in that perspective also, the respondents had time up till 08.07.2024 for completing the audit.

6. While considering the rival contentions, it is necessary to refer to Section 65 of the CGST Act which reads as below :-

* Section 65. Audit by tax authorities.-

(1) The Commissioner or any officer authorised by him, by way of a general or a specific order, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed.

(2) The officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or in their office.

(3) The registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed.

(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 exc