2024 (10) TMI 945 - HC - GST

Challenge to show cause cum demand notice issued u/s 73/74 of the WBGST CGST Act, 2017 - discrepancies in audit proceedings - HELD THAT - The petitioner no. 1 appears to have made payment of not only the tax interest but also the penalty, as identified by the audit authorities. Factum of such payment would corroborate from Form GST DRC 03 issued on 18th March 2024. Ordinarily therefore, no proceeding can be initiated in respect of the period for which an audit has already been conducted and upon completion of such audit in the manner provided under Sections 65(6) of the said Act the final audit report in Form GST ADT-02 is published, recording the discrepancies as accepted and settled. Having regard to the above and the judgment delivered by the Hon ble Division of this Court in the case of M/S. R.P. BUILDCON PRIVATE LIMITED ANR. VERSUS THE SUPERINTENDENT, CGST CX, CIRCLE II, GROUP - 10 ORS. 2022 (10) TMI 501 - CALCUTTA HIGH COURT , the petitioner no. 1 has been able to make out a prima facie case, at least for the period which is covered in the audit. However, since the period indicated in the show cause only partly overlaps the period of the audit proceedings, it would be prudent at this stage to direct the petitioner no. 1 to be present before the proper officer and to respond to the show cause. The petitioner no. 1 shall be at liberty to file its response to the show cause notice dated 28th/29th May 2024 within a period of 15 days from date. Let affidavit-in-opposition be filed within a period of 4 weeks from date. Reply, if any, thereto be filed within 3 weeks thereafter - Liberty to mention immediately upon expiry of the period for exchange of affidavits.

Summary

Issues:
Challenge to show cause-cum-demand notice under Sections 73/74 of WBGST & CGST Act, 2017; Discrepancies in audit proceedings; Authority to issue show cause notice; Prima facie case based on audit findings; Overlapping period of show cause notice and audit proceedings; Jurisdictional issue.

Analysis:
The judgment involves a challenge to a show cause-cum-demand notice issued under Sections 73/74 of the WBGST & CGST Act, 2017. The petitioner, a registered taxpayer, had undergone GST audit for the period from July 2017 to March 2022, resulting in the identification of discrepancies and subsequent payment of tax, interest, and penalty. The audit concluded with a Final Audit Report indicating satisfaction with the discharge of statutory liability. The petitioner contested the issuance of a further show cause notice for the period 2019-20, 2020-21, and 2023-24, arguing that it exceeded the authority as audit findings had been addressed and payments made accordingly.

The petitioner relied on a judgment from a Division Bench to support the contention that no show cause notice should be issued for a period already covered by audit proceedings. The respondent, representing CGST & CX authority, defended the notice issuance, highlighting that the entire period covered in the show cause notice was not part of the audit and emphasized the authority under Section 65(7) to initiate proceedings as necessary. The court acknowledged the audit findings and payments made by the petitioner, indicating that proceedings cannot be initiated for the audited period. However, since the show cause notice partially overlapped with the audit period, the court directed the petitioner to respond to the notice within 15 days and allowed for further adjudication post-response.

The court decided that the jurisdictional issue raised in the writ petition warranted a hearing and instructed the filing of an affidavit-in-opposition within four weeks. The parties were given specific timelines for filing replies and were directed to act based on the official order copy from the Court's website. The judgment balanced the audit findings, the issuance of the show cause notice, and the need for a comprehensive response from the petitioner before further adjudication.