A GST audit said to be out of time does not get a writ, but the taxpayer gets a month to appeal

Justices Rajeev Ranjan Prasad and Sunil Dutta Mishra found no jurisdictional error and declined Article 226 relief against an appealable order, preserving the appeal.

Section 65(4) of the Bihar Goods and Services Tax Act, 2017 requires an audit to be completed within three months of its commencement, and Section 65(6) requires the findings to be communicated. A firm at Chapra said the audit report issued to it for three financial years came after that period had run out, and asked the High Court to set it aside along with everything built on it. On 13 October 2026 a Division Bench declined to interfere, holding that the order in original is appealable — and then made sure the appeal was still available.

What was challenged

The writ application, as amended, sought to set aside the audit report issued under Section 65(6) of the Act for the periods 2017-18, 2018-19 and 2019-20, on the ground that it was issued after the expiry of the three-month limitation in Section 65(4), and to set aside the show cause notice and the order in original that followed from it.

The Bench examined the challenge to the show cause notice and the proceedings leading to the order, and found no non-application of mind, and no jurisdictional error of the kind that would justify stepping in before the statutory machinery had run its course.

The rest of the attack

Limitation on the audit was only the first of the grounds. The firm also challenged the show cause notice of August 2023, issued under Section 74 of the Act as a single notice covering all three years, on the footing that the mandatory pre-conditions for invoking that section were not satisfied, that it was not uploaded on the web portal contrary to instructions of the Central Board of Indirect Taxes, and that it carried no digital signature as Rule 26(3) of the Rules requires.

The same objections were pressed against the order in original of April 2024, again a single order for all three periods, together with the requirements of Rule 142(5) and (6) of the CGST Rules and two instructions issued by the GST Policy Wing in late 2023. A corrigendum of August 2024 seeking to impose penalty in exercise of powers under Section 161 was attacked as wholly without authority of law, and a separate order of October 2024 under Section 74 was challenged along with its summary.

Why the Court stepped back

Having reached that conclusion, the Court held that the order in original is an appealable order, and that it would not exercise its discretionary jurisdiction under Article 226 to entertain a challenge to it. The petitioner may seek its remedy before the appellate authority or as otherwise advised in accordance with law.

The reasoning is the familiar one about alternative remedies, but applied at the right point: a defect going to jurisdiction may justify a writ even where an appeal lies, whereas a disagreement with the conclusions reached on the material belongs to the appellate forum.

Keeping the appeal alive

The practical difficulty with sending a taxpayer back to an appeal in 2026 against an order of April 2024 is that the appeal would ordinarily be out of time. The Court dealt with that squarely, and on the record before it.

It noted that a copy of the writ application was served on the office of the Additional Solicitor General on 21 August 2024, which is within four months of the order in original of 22 April 2024. Section 107 of the CGST Act prescribes three months for filing an appeal, with a further window of one month that the appellate authority is competent to allow. On that footing the Court observed that if the petitioner prefers an appeal within one month from the date of the judgment, the appellate authority shall consider it on its own merit.

Order

The writ application was disposed of with that liberty. All questions were left open to the parties, and the Court recorded that its observations were made only for the purpose of considering the pleas about the challenge to the show cause notice, with the order in original to be considered on its own merits.