2023 (6) TMI 136 - HC - GST

Validity of audit report issued under section 65(6) of Bihar Goods and Services Tax Act, 2017 - non-consideration of the rectification application - petitioner argues that the order passed on audit report is amenable to the rectification under section 161 and without the same being considered, the show-cause notice issued by the Assessing Officer at Annexure- 5 cannot be proceeded with. HELD THAT - The report was finalized as per Annexure-3, which specifically indicates that the representative of the tax payer appeared on different dates of hearing with books of accounts and other documents. Detailed analysis of the summary returns was also done with reference to the books of accounts and the relevant documents. The observations are found in page-2 of Annexure-3A, wherein it has been specifically noticed that the Jurisdictional officer may verify and ascertain actual turnover in accordance with the provisions of BGST Act, 2017 along with supporting documents . Hence the observation in an audit report is not the final decision and we also notice some discrepancies having been dropped on examination of the explanation. The show-cause notice indicates that the assessee made a specific request, to wait for disposal of the rectification application. The Assessing Officer rightly found that there is no error apparent on the face of the record, which could be rectified under section 161 and that in any event, section 73 proceedings have been initiated based on the final audit report. The Assessing Officer also alertly notes that if any submission is made by the tax payer that would be taken on record. The Proper Officer being the Assessing Officer has looked at the audit report and has recorded his satisfaction in the show-cause notice on items raised in the audit report and it also enables the assessee to raise objections against the same. There is no reason why the writ petition should be entertained specifically when the rectification application, on which basis the proceedings under section 73 is sought to be kept in abeyance, cannot be invoked fruitfully by the petitioner. If the Assessing Officer has not completed the proceedings, the petitioner would be entitled to file his objections and seek for consideration of the same before the Assessing Officer. Petition dismissed.

Summary

Issues involved:
The issues involved in the judgment include the aggrievement of the writ petitioner with the audit report issued under section 65(6) and the non-consideration of the rectification application made under Section 161 of the Bihar Goods and Services Tax Act, 2017.

Audit Report and Rectification Application:
The petitioner argued that the order passed on the audit report is amenable to rectification under section 161, and without such consideration, the show-cause notice issued by the Assessing Officer cannot proceed. The Government Pleader contended that the rectification application does not fall under errors apparent on the face of the record and is more akin to a review of the order. It was emphasized that the audit report is not final, and the Assessing Officer must decide on the defects pointed out in the report before proceeding with the show-cause notice.

Analysis of Relevant Sections:
Section 65 of the Act provides for an audit by tax authorities, with specific procedures for conducting audits, including notice requirements and timeframes. Sub-section (6) of section 65 mandates informing the registered person of audit findings within thirty days, with possible actions under section 73 or section 74 in case of tax discrepancies. Sections 73 and 74 outline detailed procedures for the Proper Officer to serve notices and initiate proceedings against alleged tax liabilities, with specified time limits for issuing orders.

Examination of Documents and Notices:
The audit report detailed discrepancies for the assessment years, and subsequent notices were issued seeking clarification or payment. The final audit report indicated that the representative of the taxpayer appeared for hearings with relevant documents, and discrepancies were examined and some dropped based on explanations provided. The rectification application filed under section 161 was deemed impermissible as it sought a re-examination of the audit report, which is not within the purview of section 161.

Show-Cause Notice and Conclusion:
The show-cause notice indicated that proceedings under section 73 had been initiated based on the final audit report, and the Assessing Officer found no error apparent on the face of the record for rectification under section 161. The court held that the writ petition should be dismissed as the rectification application could not be fruitfully invoked, and the petitioner could file objections and seek consideration before the Assessing Officer if necessary.

Conclusion:
The court dismissed the writ petition but allowed for the petitioner to file objections and seek consideration before the Assessing Officer if the proceedings were not completed, with a reservation to that effect.