Order Date: 09 November 2022

Key Pointers:

• The Petitioner, M/s. Simon India Ltd., in the present writ petition has challenged both a draft audit report dated 30th June, 2022 issued by the Head of the Audit Team-1, CT & GST Circle, CU-II, Cuttack as well as the final audit report of the same date under Section 65(6) of the Orissa GST Act, 2017 (OGST Act).
• Petitioner contended that no opportunity was given to file a reply to the draft audit report and in opposition, the final audit report was also issued on the same day as the draft audit report was issued.
• Under Section 65(1) the audit has to be completed "within a period" "three months from the date of commencement of the audit", In terms of the proviso to Section 65(4) of the OGST Act, where the Commissioner is satisfied that the audit cannot be completed within three months then “for the reasons to be recorded in writing” he may extend the period for completion of the audit “by a further period not exceeding six months”.
• The Court observed that in the present case, the audit exercise commenced on 8th October, 2021 but the three months’ period commenced on 22nd March, 2022 when the Petitioner was stated to have submitted the documents called for by the authorities. 
• In view of the Explanation to Section 65 (4) of the OGST Act, the 3-month period within which the audit had to be completed commenced, in the present case, on 22nd March, 2022, the entire audit exercised had to be completed with the submission of final audit report in terms of Section 65 (6) of the OGST Act on or before 22nd June, 2022
• Further, on a plain reading of Section 65 (4) together with Section 65 (6) of the OGST Act and Rule 101(4) of the OGST Rules, it is plain that the procedural requirement of the Petitioner having to be given 30 days’ time to file a reply to the draft audit report was not followed in the present case. On that short ground, this Court sets aside the final audit report dated 30th June, 2022 issued under Section 65 (6) of the OGST Act.
• The Hon’ble court stated that even if the Petitioner is afforded an opportunity at this stage to file a reply to the above draft audit report, followed by the authorities issuing the final audit report, the original deadline of three months would be crossed on 21st December 2022. If the exercise is not completed by that date, the entire exercise would be rendered futile. 
• Therefore, the following directions are issued by this Court subject to the condition that the Commissioner will by a reasoned order in terms of the proviso Section 65(4) of the OGST Act extend the time for completion of the audit by the maximum permissible further period of six months in terms thereof.
• The petition is disposed of in the above terms.