The audit report's delay does not invalidate show cause notices under the CGST Act if they comply with statutory provisions, as the audit serves merely as additional material for initiating action.

JUDGMENT :

(A.K. Jayasankaran Nambiar, J.)

This Writ Appeal is preferred by the petitioner in W.P. (C).No.39222 of 2024 aggrieved by the judgment dated 11.12.2024 of the learned Single Judge that dismissed the writ petition.

2. The brief facts necessary for disposal of the Writ Appeal are as follows :

The petitioner impugned the show cause notices issued to it under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017/Kerala State Goods and Services Tax Act, 2017 [hereinafter referred to as the “CGST/SGST Act”] as also the audit report dated 08.07.2024 on which they were based, inter alia on the contention that the audit in question was not completed within the time prescribed for the same under the CGST Act. The contention, in other words, was that since the audit envisaged under Section 65 of the CGST Act was not completed within the time limit of three months from the date of its commencement as envisaged thereunder, the audit report, as also the show cause notices issued based thereon, were without jurisdiction and therefore liable to be quashed.

3. The appellant points out that it was informed of the conduct of the audit by Ext.P1 notice dated 15.12.2023, which also specified the documents required by the audit team for conducting the audit. Thereafter, the audit team visited the business premises of the appellant in connection with the audit on 10.01.2024. The documents called for by the audit team were produced by the appellant on various dates, and the last submission of the said documents, as evidenced by Ext.P2, was on 19.02.2024. Thereafter, Ext.P3 audit enquiry notice dated 07.03.2024 was issued, pointing out the discrepancies observed during the audit and giving the appellant an opportunity of commenting on the same. The appellant is stated to have submitted Ext.P4 objections and requested for a personal hearing that ultimately took place on 09.04.2024, on which date the appellant also submitted additional documents that were requested by the Department, albeit without any written notice for the same. Thereafter, notwithstanding the statutory mandate under Section 65 of the CGST Act that required the audit to be completed within three months from the date of commencement of the audit, namely, 19.02.2024, the audit report was prepared only on 08.07.2024.

4. The learned Single Judge, who considered the matter, found that although the appellant had submitted the documents specifically requested in writing by the Department on 19.02.2024, inasmuch as the appellant had furnished additional documents, as requested by the Department, on 09.04.2024, the date of commencement of the audit for the purposes of the Explanation to Section 65(4) had to be seen as postponed to 09.04.2024, and viewed thus, the audit report dated 08.07.2024 was within the three months period envisaged under Section 65(4) for completion of the audit. The writ petition, in its challenge to the audit report and the consequent show cause notices, was therefore dismissed by the learned Single Judge as devoid of merit.

5. In the appeal before us, it is the submission of Sri.Joseph Markos, the learned senior counsel, assisted by Sri.Abraham Joseph Markos, the learned counsel, that merely because the appellant had produced additional documents as requested by the audit team during the audit proceedings, the date of commencement of the audit could not have been seen as postponed. According to the learned senior counsel, the date of commencement of audit is statutorily prescribed as the date on which the documents required by the audit team for commencing the audit were made available by the assessee. That date was 19.02.2024. Thereafter, on 07.03.2024, an audit enquiry notice was served on the appellant, which, by its very nature, could have been served only after the audit had “commenced”. The documents requested thereafter could only be seen as documents sought for during the audit proceedings that had already commenced and the submission of those