A departmental audit under Section 65 of the CGST Act is supposed to run its course in three months, with a six-month extension if the Commissioner thinks it necessary. Taxpayers who feel an audit has dragged on well past that window often argue the resulting report is void for being out of time. Hubergroup India Private Limited tried exactly that argument before the Gujarat High Court, and lost, though not without the Court handing the department a warning of its own.
The company is a chemicals and printing-inks business registered across several states. The GST department issued it an audit notice in Form ADT-01 in June 2022 covering financial years 2017-18 to 2022-23, followed by a second notice later that year and a third in February 2024. Hubergroup's position was straightforward: it had handed over the documents the department asked for by August 2022, so the three-month clock, even stretched to the maximum nine months the statute allows, had long since run out by the time the final audit report was issued on 2 August 2024. Three separate ADT-01 notices for the same audit period, the company argued, could not revive a dead proceeding.
Officers at the department told a different story from the paperwork. Officers maintained that several of the documents they needed were still outstanding well after 2022, and that the audit was only actually carried out at Hubergroup's premises starting 19 June 2024. On that reading, the report issued six weeks later was comfortably within time, whatever the dates on the earlier notices. The audit report was followed by eight show cause notices on 2 and 3 August 2024, which is what gave the dispute its urgency for the company.
A Division Bench of Justices A.S. Supehia and Vaibhavi D. Nanavati sided with the department on the central point. The mere fact that three ADT-01 notices went out for one audit period does not, by itself, make the audit a nullity. What matters for computing the statutory period is when the audit was actually instituted, which the Court treated as the date officers began physically examining the taxpayer's records at its premises, not the date of the first paper notice issued years earlier. Measured from June 2024, the August 2024 report came within the time the Act allows.
That alone would have been a clean win for the revenue, but the Bench did not stop there. It found that the delay between the first notice and the actual commencement of the audit was not entirely of Hubergroup's making either. The department had kept the audit open across three notices without ever telling the company, in clear terms, exactly which documents remained pending and why the file could not be closed sooner. The Court held that tax officers are obliged to inform a registered person of missing or outstanding documents within a reasonable time, rather than letting an audit linger on the taxpayer's uncertainty about what is still owed.
This second finding is less a concession to Hubergroup than a rule for the next taxpayer who finds an audit stretching across years and several notices. A department that wants the benefit of counting time from when it actually got down to work, rather than from its first notice, now has to show it kept the taxpayer reasonably informed of what was missing in the interim. An audit file that sits open for two years with no clear communication about outstanding papers invites exactly the kind of challenge Hubergroup brought, even if that challenge does not succeed on the timeliness point alone.
For businesses facing a GST audit that has run through more than one ADT-01 notice, the practical lesson cuts both ways. A long gap between the first notice and the department's actual visit to the premises is not, on its own, a ground to call the eventual report time-barred, since courts will look at when the audit was truly carried out rather than when the paper trail began. At the same time, a taxpayer left in the dark about what documents the department still wants has a real grievance, one the Gujarat High Court has now recognised as a procedural obligation on the revenue rather than a courtesy.
The ruling leaves Hubergroup's show cause notices from August 2024 to be contested on their own merits, since the audit that produced them has now been held valid. Companies sitting on audits that have gone quiet for long stretches would do well to press the department in writing for a list of what remains outstanding, both to move their own file along and to build a record for any later argument that the department, not the taxpayer, was responsible for the delay.