GST Authorities Must Give Taxpayers Reasonable Time To Furnish Audit Documents: Gujarat High Court

Tax authorities must inform taxpayers within a reasonable time if documents submitted for a GST audit are incomplete, the Gujarat High Court has held.

“However, we are of the opinion that, where a registered person furnishes documents pursuant to a notice issued under Section 65 of the CGST Act but some documents remain outstanding, the tax authorities are required to inform the registered person of the missing or outstanding documents within a reasonable time, so that the audit can be completed at the earliest,” the court observed.

The court made the observation while rejecting HuberGroup India Private Limited's challenge to the timeliness of a GST audit report. It noted that the authorities had issued three audit notices without informing the company which documents remained outstanding, contributing to the delay.

A bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati, however, held that this failure did not by itself invalidate the audit. The law provides an alternative basis for determining when an audit begins: the date on which it is actually instituted at the taxpayer's place of business.

The company received its first audit notice on June 27, 2022, covering the financial years 2017-18 to 2019-20.

The company submitted documents at a hearing on July 12, 2022, and emailed them again on August 9. The authorities issued another notice in November, seeking the same records. In February 2023, HuberGroup submitted its purchase register and reiterated that it had already provided the other documents.

A third notice followed in February 2024, adding the financial years 2021-22 and 2022-23. The company continued to submit records in response.

HuberGroup argued that it had furnished the required documents for the earlier years by August 2022, so the audit report issued on August 2, 2024, was time-barred. It also challenged eight show-cause notices issued on August 2 and 3.

The Revenue maintained that some documents were still outstanding and that the audit began at the company's premises on June 19, 2024.

Under Section 65(4) of the CGST Act, an audit must be completed within three months of commencement, which is determined by whichever occurs later: submission of the required documents or the audit's actual institution at the taxpayer's place of business. The court noted that whether all documents had been furnished remained disputed.

The court concluded that the audit report had been prepared within the prescribed three-month period. It declined to set aside the eight show-cause notices under Section 74 of the CGST Act at this stage, leaving the company free to respond to them and challenge any resulting action before the appellate authority under Section 107.

The writ petition was dismissed.

For Petitioner:Advocate S. S. Iyer

For Respondents: Ankit Shah, Advocate, for Respondent Nos. 1 to 5; Archit P. Jani, Advocate, for Respondent No. 6