The Bombay High Court has stayed the adjudication order passed by the audit officer.
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla has observed that the Officer who conducted the audit is also the same Officer who has issued the Show Cause Notice and passed an adjudicating order, and therefore, there is clear conflict of interest and an inherent bias.
The Petitioner has challenged the Notification No.56 / 2023-Central Tax dated 28th December, 2023 issued by department and the corresponding Notification No. 56/2023–State Tax dated 16th January, 2024.
One of the points on which these Notifications are challenged is that these Notifications extended the time for adjudication of the Show Cause Notice issued for the Financial Year 2019-2020, and according to the Petitioner, these dates can be extended only by exercising power under Section 168-A of the Central Goods and Services Act, 2017.
The petition submitted that the Notifications issued under Section 168-A of the Act have to be on the recommendation of the GST Council. Since these Notifications have not been issued on the recommendation of the GST Council, the Notifications itself are bad and void ab initio. According to the Petitioner, if these Notifications are quashed and set aside, then the impugned order could never have been passed as it is beyond the period of limitation as specified under Section 73 (10) of the CGST Act, 2017.
Another ground of challenge in the above Petition is also the fact that the Show Cause Notice (issued under Section 73 (1) of the CGST Act, 2017) had to be issued atleast three months prior to the time limit specified in Section 73 (10) of the GST Act for issuance of the adjudicating order.
According to the Petitioner, even assuming that the Notifications (extending the time) are valid, then the order had to be passed by 31st August, 2024. If this is the date, then under Section 73 (2), the Show Cause Notice had to be issued atleast three months prior to this date, namely, atleast before 31st May, 2024. In the facts of the present case, the Show Cause Notice is issued on 31st May, 2024 and therefore, issuance of the Show Cause Notice itself was barred and consequently, the impugned order could not have been passed.
The petitioner contended that the Officer who conducted the audit is also the same Officer who has issued the Show Cause Notice and passed an adjudicating order, and therefore, there is clear conflict of interest and an inherent bias. The has paid a specific part of the tax amounting to approximately Rs.18.78 Crores and the adjudicating order seeks to recover even this amount from the Petitioner. These are the contentions in brief, on the basis of which, reliefs are sought in the above Writ Petition.
The court granted ad-interim relief by directing that the effect, operation and execution of the impugned Order shall remain stayed until further orders.
Case Details
Case Title: Tushar Builders Versus Deputy Commissioner of State Tax Pune & Others
Case No.: Writ Petition No. 5610 Of 2025
Date: APRIL 29, 2025
Counsel For Petitioner: Adv. Sanket S. Bora with Adv Abhay H.Bora
Counsel For Respondent: S. D. Vyas, Addl. G. P. with Adv. Ketan Joshi ‘B’ Panel
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