2022 (10) TMI 501 - HC - GST

GST audit and GST investigation proceedings - simultaneous proceedings - an audit u/s 65 of the CGST Act, 2017 has been conducted by the department for the same tax period - HELD THAT - Since the audit proceedings under Section 65 of the Act has already commenced, it is but appropriate that the proceedings should be taken to the logical end. The proceedings initiated by the Anti Evasion and Range Office for the very same period shall not be proceeded with any further. There will be a direction to the first and fourth respondents to issue show cause notice to the appellants within a period of six weeks from the date of receipt of the server copy of this judgment and order and afford a reasonable opportunity to the appellants to submits their reply along with documents - Application allowed.

Summary

Issues:
Challenge against notices issued by CGST and CX Headquarters, Anti Evasion, Kolkata North Commissionerate for audit, Scrutiny of returns post-audit, Parallel proceedings by different wings of the department for the same period.

Analysis:

1. The appellants filed an intra-Court appeal against the order dismissing their writ petition seeking to quash notices related to audits and scrutiny of returns for the financial years 2017-2018 to 2019-2020. The Single Bench had dismissed the petition on the ground that the proceedings were akin to show cause notices, prompting the appellants to appeal.

2. The Court heard arguments from both parties and noted that three wings of the department were pursuing actions against the appellants for the same period. The Audit Commissionerate initiated proceedings first, followed by the Anti Evasion wing and the Range Office, all targeting the appellants for the same timeframe.

3. The appellants had responded to the Audit Commissionerate's notice and addressed certain issues raised during the audit. However, the other two wings of the department proceeded with separate notices for the same period, leading to confusion and duplication of efforts.

4. The Court observed that parallel proceedings by different wings of the same department for the same period were unwarranted, especially considering the availability of electronic communication within the department. It was deemed appropriate to allow the audit proceedings under Section 65 of the CGST Act, 2017 to reach a conclusion before further actions were taken.

5. Consequently, the Court allowed the appeal, directing the concerned respondents to issue show cause notices to the appellants within a specified period, afford them an opportunity to respond, conduct a personal hearing, and pass a speaking order on merits within a stipulated timeframe.

6. The Court also restrained the second and third respondents from proceeding further against the appellants for the same period covered by the audit proceedings, emphasizing that the direction was limited to the financial years 2017-2018, 2018-2019, and 2019-2020.

7. The judgment clarified that if the second and third respondents required additional information for a different assessment period, they were free to notify the appellants accordingly. No costs were awarded, and the parties were instructed to receive certified copies of the order promptly upon completion of legal formalities.