Section 65 of the CGST Act, 2017 — Audit Report —-- The petitioner challenged audit report dated under Section 65(6) of the Act. The Advocate for the Petitioner submitted that in terms of Rule 101(4), the proper officer may inform the registered person of the discrepancies noticed, and the said person may file his reply and the proper officer shall finalise the findings of the audit after due consideration of the reply furnished. In the present case, there was no opportunity granted to file a reply to the draft audit report and on the same day that the draft audit report was issued, the final audit report was also issued. The court observed 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.

Held that:- The Hon’ble High Court set aside the Audit report and directed the Petitioner will file its reply to the draft audit report accompanied by all the documents by 28th November, 2022. After considering the reply, the final audit report will be issued not later than 21st December, 2022. Above directions will be subject to the Commissioner granting extension of time for the issuance of the final audit report in terms of the proviso to Section 65(4). If such extension is not granted, then even the draft audit report would stand automatically quashed.