Can inspection can be conducted twice for a FY, Goods and Services Tax - GST

[UDHAYKUMAR KANDASAMY]

Dear all,

Can inspection can be done under GST twice for the same FY when the first inspection was ready adjudicated as per provisions of law and order wad passed.

In Sept 2022 inspection was conducted covering FY 2017-18 to FY 2021-22 as per GST act and order was issued and the order is in appeal as of today.

Inspection for the FY 2018-19 to FY 2024-25 was conducted in the 3rd week of April 2025 for the same assessee.

Whether it is possible to conduct inspection again for FY 2018-19 to FY 2021-22 for the same assessee?

Is it valid under GST Act?

Please clarify.

Thanks

Posts / Replies

[Sadanand Bulbule]

Yes. Any number of inspections can be conducted for the same year under Section 67 of the CGST Act, provided there are valid reasons to believe that any person is engaged in the evasion of tax. Normally repeated inspections for the same year are conducted only based on incriminating material manifest in the hands of the IO. And such person can also ask the IO to reveal the reasons for repeated inspections.

[KASTURI SETHI]

Dear Querist,

Are you talking of Audit or Inspection ? 

[YAGAY andSUN]

The situation you’ve outlined involves the possibility of conducting a second inspection for the same financial years (FY 2018-19 to FY 2024-25) after an initial inspection for the period FY 2017-18 to FY 2021-22, where an order has already been passed and is under appeal.

Let’s break this down and analyze it under the provisions of the Goods and Services Tax (GST) Act.

1. Inspection and Adjudication Under GST Act:

Under the GST Act, an inspection of records, goods, or business premises can be conducted by tax authorities for various purposes such as verification of compliance, audit, and enforcement of provisions of the Act. The general provisions around inspections are outlined in Section 67 of the CGST Act, 2017, which grants powers to officers to inspect goods and documents.

The inspection process typically includes:

• Section 67(1): The officer may inspect business premises for the purpose of verifying the correctness of tax paid, returns filed, or the accuracy of the records.
• Section 67(2): In case of the inspection of goods or documents, an authorised officer can seize goods if there is reason to believe that they are in contravention of the Act.

2. Adjudication and Appeal:

Once an inspection is conducted, an adjudication order may be issued based on the findings, and the assessee has the right to appeal against such an order under Section 107 of the CGST Act.

You mentioned that an order has already been issued in September 2022 for the period FY 2017-18 to FY 2021-22, and it is currently under appeal.

3. Can a Second Inspection be Conducted for the Same Period (FY 2018-19 to FY 2021-22)?

General Principles Under GST:

• No Repetitive Inspections for the Same Period: The GST Act does not permit repeated inspections or audits for the same period unless there is a specific reason or new evidence that justifies reopening the investigation for that period.
  • Finality of Adjudication: Once an adjudication order is passed for a particular period, and the matter is under appeal, there should not normally be any subsequent inspection or audit for the same period, as the issue is already being contested in the appeal process.
• Reopening an Assessment or Inspection: As per Section 73 and 74 of the CGST Act, an assessment can be reopened if the authorities have evidence of tax evasion or under-reporting of taxes. However, this should only apply if new facts or evidence have come to light or if there is an indication of fraud or wilful misrepresentation.
  • If the appeal is still pending, and no new facts or substantial evidence are available, the re-opening of the inspection for FY 2018-19 to FY 2021-22 would not be valid unless the appeal order directs a re-examination or review.

Possibility of Inspection for a New Period (FY 2022-23 and onwards):

• Inspection of New Periods (FY 2022-23 and onwards): As per your query, a second inspection was conducted in April 2025 for FY 2018-19 to FY 2024-25. Assuming this inspection was conducted separately for new years (FY 2022-23 and beyond), it would be valid as long as it was in accordance with the powers under Section 67 (inspection, search, and seizure provisions).
  • Note: This inspection must be for different years (FY 2022-23 onwards) and should not overlap with the years already under adjudication (FY 2017-18 to FY 2021-22), unless the tax authorities have a legitimate reason or new evidence linking the previous period to the new one.

Validity of Re-inspection for FY 2018-19 to FY 2021-22:

• If no new evidence: If the inspection for FY 2018-19 to FY 2021-22 was already done, and the adjudication order is passed (or is in the process of being appealed), the tax authorities cannot inspect the same period again unless new evidence or fraud is discovered.
• If new evidence exists: If the authorities have substantial evidence showing that there were discrepancies, misrepresentation, or fraud during the previous inspection period, they could initiate a new inspection or audit for the same period.

4. Conclusion:

• Second inspection for the same period (FY 2018-19 to FY 2021-22): Normally, under the GST Act, a second inspection cannot be conducted for the same period once an adjudication order has been issued and is under appeal, unless new facts or evidence emerge that justify such an action.
• Inspection for new periods (FY 2022-23 and onwards): The inspection for FY 2022-23 to FY 2024-25 is valid, assuming it is not a mere continuation of the earlier inspection, and the scope and period of inspection are clearly delineated.

If the authorities are seeking to inspect the same period again (FY 2018-19 to FY 2021-22) without new evidence, it could potentially be challenged by the assessee on the grounds of procedural impropriety and repetition of actions for the same period.

It is advisable for the assessee to consult with a tax expert or lawyer, especially to address potential overlaps and contest actions under appeal.

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