GST ADT-01 Notice: Departmental Audit Under Section 65

Being selected for a GST audit sounds alarming, but it is worth saying plainly at the outset: Form GST ADT-01 is not a penalty notice, and it does not itself allege that you have done anything wrong. It is an intimation that your business has been selected for an audit under Section 65 of the CGST Act, and it tells you when, where, and what records will be examined.

That said, an audit is a genuine, structured process with real time limits and real documentation demands, and how you handle the coming weeks shapes what happens if the officer does find a discrepancy. This article covers exactly what ADT-01 requires, when the audit clock actually starts ticking, how long the process can run, and what happens once it concludes.

What ADT-01 Actually Is

Section 65 of the CGST Act, read with Rule 101, empowers the Commissioner, or an officer authorised by the Commissioner, to conduct an audit of any registered person. The audit can take place at your place of business or at the tax department's office. Before the audit begins, the department is required to give you prior intimation in Form GST ADT-01, with a minimum notice period of fifteen working days before the audit is actually conducted.

The notice will specify the audit period under review, the documents required, and the proposed timing and location. Common documents requested include your GSTR-1 and GSTR-3B filings, purchase and sales registers, input tax credit records, annual returns, trial balance and financial statements, bank statements, e-way bills, and reconciliation statements.

Is There a Time Limit on When ADT-01 Can Be Issued?

Here is the part most people miss, and it matters if you are wondering whether an audit notice for an older period can still be challenged on timing grounds. Section 65 itself does not specify a statutory time limit restricting when ADT-01 can be issued. The audit process is separate from an assessment, and it concludes with the audit findings, not with a demand. If the audit reveals tax short-paid, not paid, erroneously refunded, or ITC wrongly availed, any subsequent demand action under Section 73 or Section 74 must still respect the limitation periods that apply to those sections specifically, generally three years and five years respectively from the relevant due date. The audit notice itself, however, is not time-barred in the same way.

When Does the Audit Clock Actually Start?

The date of commencement of the audit is defined precisely: it is the later of two dates, either the date the records and documents requested by the department are actually made available by you, or the date the audit is actually instituted at your place of business, whichever comes later.

This distinction matters because the three-month completion clock runs from this commencement date, not from the date ADT-01 was issued. For example, if ADT-01 is issued fixing an audit to commence on or after a certain date, but you upload the requested records a few days into that window with no physical visit taking place, the commencement date is when you made those records available. If officers instead visit your premises to institute the audit in person, the later of the document-submission date and the visit date governs.

Practitioners are consistent on one important point here: once the audit has genuinely commenced, subsequent requests for clarifications or additional documents during the normal course of the audit do not reset or postpone that commencement date. If they did, the mandatory time limit on the audit would become meaningless, since the department could simply keep asking for more documents indefinitely to delay the clock.

How Long the Audit Can Run

The audit must be completed within three months from the date of commencement. If it cannot be completed in that time, the Commissioner can extend the period by a further duration not exceeding six months, provided the reasons for the extension are recorded in writing. This means the outer limit, from commencement to a fully extended completion, is nine months.

What Happens During and After the Audit

While the audit is underway, you are expected to facilitate the officer's verification of your books of accounts and other relevant documents, and to provide any additional information reasonably requested within the audit's normal course.

Once the audit concludes, the officer must inform you of the findings, your rights and obligations, and the reasons behind those findings, within thirty days of the conclusion of the audit, through Form GST ADT-02. Before finalizing this report, the officer may first inform you of any discrepancies identified and give you a chance to reply. The final audit report is then prepared taking your reply into account.

If the audit findings indicate tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilized, the officer can initiate formal proceedings under Section 73 or Section 74, depending on whether fraud or suppression is alleged.

How to Prepare for and Respond to ADT-01

1. Confirm the audit period specified in the notice and begin gathering the requested documents well before the fifteen-working-day window closes.
2. Reconcile your GSTR-1, GSTR-3B, and GSTR-2B for the audit period internally before the officer does, so you already know where any discrepancies might surface.
3. Decide whether records will be made available electronically or the audit will be conducted at your premises, since this affects exactly when your three-month clock will start running.
4. Keep a clear log of every document you submit and the date you submit it, since this record becomes important if there is ever a dispute about when the audit actually commenced.
5. If the officer raises discrepancies before finalising the report, respond specifically and promptly to each point raised, since your reply is factored into the final audit report before it is issued.

ADT-01 vs ADT-03: Two Different Kinds of Audit

Departmental audit under Section 65 is not the only audit mechanism in GST law. Special audit under Section 66, triggered by Form ADT-03, is a different and generally more serious process, covered separately in this series. The key distinction worth knowing now: ADT-01 audits are conducted by departmental officers themselves, based on routine selection or risk parameters, while ADT-03 special audits are ordered when an officer suspects complex discrepancies requiring an external chartered or cost accountant's examination.

FAQs: People Also Ask

What is a GST ADT-01 notice? ADT-01 is an intimation issued under Section 65 of the CGST Act informing a registered person that they have been selected for a departmental GST audit, specifying the audit period, required documents, and proposed timing.

How much advance notice must the department give before an audit under Section 65? The department must issue Form GST ADT-01 at least fifteen working days before the audit is actually conducted.

How long does a GST audit under Section 65 take to complete? The audit must be completed within three months from the date of commencement, extendable by the Commissioner for a further period not exceeding six months, with written reasons recorded.

Is ADT-01 a penalty notice? No. ADT-01 only informs you of the commencement of an audit. Penalties or tax demands can only arise later if the audit uncovers significant discrepancies, and those follow separately through Section 73 or 74.

When does the three-month audit clock actually start? It starts from the later of the date you make the requested records available, or the date the audit is actually instituted at your place of business.

FAQs: Real Questions People Ask

The officer keeps asking for more documents weeks into the audit and says the audit hasn't really "started" yet. Is this correct? No, this is a common point of confusion worth pushing back on carefully. Once the audit has genuinely commenced, meaning either your records were made available or the audit was physically instituted, subsequent requests for clarification or additional documents during the normal course of the audit do not reset that commencement date. If the officer is suggesting otherwise to extend the audit indefinitely, this is worth raising directly, citing the explanation under Rule 101 and the settled interpretation that the three-month limit would otherwise be meaningless.

I received ADT-01 for a financial year that's already several years old. Can I challenge the notice on the grounds that too much time has passed? This is a difficult argument to win on timing alone. Section 65 does not specify a statutory time limit restricting when an audit notice can be issued, since the audit itself is not an assessment. What does have firm limitation periods are any subsequent demand proceedings under Section 73 or 74 if the audit uncovers issues, generally three years or five years respectively from the relevant due date. Focus your energy on preparing thoroughly for the audit itself rather than contesting its timing.

The officer identified a discrepancy during the audit and gave me a chance to respond before finalising the report. How seriously should I treat this stage? Very seriously. This is your best opportunity to shape the outcome before the audit report is finalised in Form GST ADT-02. A clear, well-documented reply addressing the specific discrepancy, rather than a general denial, genuinely gets factored into the final report. If the discrepancy is resolved satisfactorily at this stage, it may prevent the matter from escalating into a formal demand notice under Section 73 or 74 altogether.

Not Sure Which Documents to Prioritise Before the Audit Starts?

Upload your ADT-01 notice to NoticeSahayak. It identifies the specific audit period and document list from your notice, flags the reconciliation checks worth running before the officer does, and helps you track exactly when your three-month clock has started.