Time-limit for audit commences from date of furnishing records and other documents: Madras HC


Time-limit for audit commences from date of furnishing records and other documents: Madras HC

The Madras High Court addressed the challenge to an order dated 22.12.2023 in the case of GG Organics Care Pvt. Ltd. Vs State Tax Officer. The petitioner, a demerged entity from GG Organics Pvt. Ltd., contested proceedings initiated against them following an audit and the issuance of a show-cause notice.

It Directs assessee to place all relevant documents on record in connection with non-filing of FORM ITC-02 as there has been no transfer of Input Tax Credit (ITC) to the consumer division. Assessee, pursuant to an audit made two-fold submissions challenging the GST Audit viz.

(i) Manner of audit conducted is not in accordance with section 65(4) of the CGST Act.

(ii) The audit took longer than three months to complete, starting on May 16, 2023, and ending on August 18, 2023.

As for the contention of assessee that GST Audit proceedings due to be completed in 3 months went beyond the stipulated period, HC opines “cannot be countenanced at this juncture” since it is ‘unclear’ from the documents on record as to when all the documents called for in GST ADT-01 were provided by assessee.
In that vein HC clarifies that explanation to Section 65 (4) provides that the date of commencement of audit would be when all records and documents called for by the tax authorities were made available by the registered person.

Thus, the impugned order is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order. Upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of remittance of 10%.

The copy of the order is as under:

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