Audit report can’t be issued without providing reasonable opportunity for filing reply: HC

Case Details: Tinton River Palms v. State of Karnataka - [2023] 147 taxmann.com 545 (Karnataka)

Judiciary and Counsel Details

• • B.M. Shyam Prasad, J.
  • K.M. Shivayogi Swamy, Adv. for the Petitioner.
  • Hema Kumar. K. for the Respondent.

Facts of the Case

The petitioner received notice to submit books of account for conducting audit by department. It field writ petition to challenge the audit report on the ground that audit report was issued within seven days of notice without providing reasonable opportunity for filing reply. The department submitted that the opportunity was provided to the petitioner to respond to the observations but the petitioner has not filed response and therefore the petitioner can’t complain of lack of opportunity.

High Court Held

The Honorable High Court noted that the impugned Audit Report dated 31.12.2022 was issued by the department. However, the notice under Section 65(5) of CGST Act, 2017 was served on the petitioner only on 23.12.2022. Therefore, the impugned audit report can’t be said to be issued after a reasonable opportunity. Thus, the Court held that the audit report was to be quashed and the petitioner was granted liberty to file response.