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2023 (5) TMI 847 - HC - GSTValidity of audit report under Section 65 6 of the Karnataka Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017 - consequential direction to the third respondent to readjudicate after extending a reasonable opportunity in terms of SCN issued under Section 65 5 of the KGST/CGST Act - HELD THAT - 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 09.12.2022 within two weeks from the date of receipt of a certified copy of this order. The petition is allowed-in-part.
Issues: Impugned audit report under KGST/CGST Act, lack of reasonable opportunity, quashing of audit report, extension of time for response.
In this case, the petitioner challenged 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. The petitioner sought a direction to the third respondent to readjudicate after extending a reasonable opportunity as per the Show Cause Notice dated 09.12.2022 issued under Section 65[5] of the KGST/CGST Act. The petitioner contended that although they were given an opportunity to file books of accounts, the Notice under Section 65[5] was received late, and the audit report was passed within seven days without a reasonable opportunity. The learned counsel for the petitioner argued that the impugned audit report was premature due to the delayed receipt of the notice, thus warranting interference by the Court. The learned Additional Government Advocate for the respondents pointed out that the petitioner did not respond to the observations in the audit report despite being given an opportunity to do so. However, it was acknowledged that the notice was served late, and the audit report was issued within a short period thereafter. The Court observed that if the petitioner had submitted the books of accounts in March 2022 and the final endorsement was made in October 2022, receiving the Notice only in December 2022 did not afford a reasonable opportunity for response. Consequently, the Court concluded that the audit report could not be considered to have been issued after a fair opportunity and decided to intervene in the matter. The Court allowed the petition in part, quashing the impugned Audit Report dated 31.12.2022 and granting the petitioner the liberty to file a response with the third respondent by 27.02.2023. The prescribed thirty days for compliance under Section 65[6] of the KGST/CGST Act would be calculated from the given date, ensuring that the petitioner had adequate time to provide a comprehensive response following the Court's decision.
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