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2024 (9) TMI 54 - HC - GSTTime Limitation - refund of tax - HELD THAT - It is the petitioner s case that pursuant to the said notice, an audit was conducted under Section 65 of the CGST Act/the DGST Act much beyond the period as stipulated under Section 65 (4) of the CGST Act /the DGST Act. The petitioner states that it continued to receive the audit memos from time to time indicating that the petitioner was liable to pay certain amounts plus tax and the petitioner has duly discharged the same. The petitioner s grievance regarding the multiple audit memo appears to be justified. In terms of Section 65 (6) of the CGST Act /the DGST Act, the proper officer is required to inform the registered person about the findings of the audit, his rights and obligations and the reasons for such findings. The CGST Act / DGST Act does not provide for issuance of the multiple audit memos determining the liability of a taxpayer. In the present case, it is found that the audit memos not only indicated the findings of the auditors, but also called upon the petitioner to pay the tax as determined, along with the interest and penalties as applicable. The impugned SCN cannot be quashed for the said reason. Although, the impugned SCN may be premised on the findings of the audit report, the same is within the statutory framework. Any irregularities in issuing the audit memos does not impinge the validity of the impugned SCN. It cannot be accepted that the impugned SCN is liable to be set aside at the threshold stage - petition disposed off.
Issues:
Petitioner challenging repeated audit memos and demand notices issued by Respondent No. 3, alleging they are time-barred under Section 65(4) of the Central Goods and Services Tax Act 2017. Petitioner seeking quashing of audit memos, submission of original note sheet, and direction to not initiate further proceedings based on the audit findings. Analysis: The petitioner filed a petition seeking the quashing of audit memos and demand notices issued by Respondent No. 3, claiming they were barred by limitation under Section 65(4) of the CGST Act 2017. The petitioner also requested the submission of the original note sheet granting permission for the audit and sought a direction to halt further proceedings based on the audit findings. The petitioner contended that the repeated audit memos and subsequent demand notices were illegal and non-est under the statute. The petitioner was aggrieved by a Show Cause Notice (SCN) dated 01.08.2024 issued under Section 74 of the CGST Act and the DGST Act, based on an audit conducted under Section 65 of the Acts. The audit was initiated following the petitioner's application for tax refunds and subsequent referral to the Anti-Evasion Wing for investigation. The audit period was extended to cover additional financial years beyond what was stipulated under the law. The High Court noted that the audit memos issued to the petitioner went beyond the statutory period prescribed under Section 65(4) of the CGST Act. The court found merit in the petitioner's objection to the time-barred audit memos and highlighted that the statutory provisions did not allow for the issuance of multiple audit memos determining a taxpayer's liability. The court observed that the audit memos not only communicated findings but also demanded payment of determined amounts, interest, and penalties. The Respondents failed to justify the issuance of demand letters during the audit process as per any statutory provision. However, the court held that the irregularities in issuing the audit memos did not invalidate the impugned SCN. While the SCN was based on audit findings, it was deemed to be within the statutory framework, and any flaws in the audit memos did not affect the validity of the SCN. Ultimately, the court declined to quash the impugned SCN at the initial stage but clarified that the petitioner could raise contentions in response to the SCN. The adjudicating authority was directed to consider the petitioner's reply to the SCN within three weeks and make an appropriate decision. Both parties' rights and contentions were preserved, and the petition was disposed of accordingly, with pending applications also being resolved.
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