Dear Experts,
We received ADT-01 on 03-01-2024, intimating us about the conduct of a departmental audit for FY 2021–22, with a request to submit the relevant details by 23-01-2024. We submitted the required information on 23-01-2024.
Subsequently, we received the audit observations in Form ADT-02 on 25-07-2025.
In this context, would the issuance of ADT-02 be considered time-barred under Section 65 of the CGST Act read with Rule 101 of the CGST Rules? As per my understanding, the audit should be completed within 3 months from the date of commencement (extendable to 6 months with approval). In our case, the gap between submission and issuance of ADT-02 is over 18 months.
Would appreciate views or experiences from others on similar timelines.
Regards,
S Ram
Audit report issued after 18 months may be time-barred under Section 65 CGST Act and Rule 101 CGST Rules A registered person received a departmental audit notice and submitted required details within the stipulated time. However, the audit observations in Form ADT-02 were issued over 18 months later, raising concerns about time-bar under Section 65 of the CGST Act and Rule 101 of the CGST Rules, which prescribe audit completion within three months, extendable to six months. Legal opinions indicate that the audit report can be challenged as time-barred, but once the audit report is issued, a show-cause notice (SCN) may follow, necessitating contesting both on merits and limitation grounds before the adjudicating authority. The audit memo and audit report are distinct; the former offers an opportunity to settle objections pre-litigation, while the latter initiates legal proceedings. Courts have allowed extensions for audit completion, and departments may argue delays due to late receipt of records. Sole reliance on time-bar challenges is risky; detailed responses to objections are advisable. Appeals against confirmed demands follow adjudication, not direct to appellate authorities. (AI Summary)
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