The Punjab & Haryana High Court has held that the GST department cannot be prevented from conducting preliminary inquiry relating to books of accounts of a registered person.
The bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth has observed that the audit is akin to a preliminary inquiry and the Department ought not been prevented from conducting preliminary inquiry relating to the books of accounts of a registered person and no prejudice can be said to have been caused to the concerned registered person.
The petitioner/assessee assailed the proceedings initiated by the respondents under Section 65 of the CGST Act, 2017, for conducting audit.
The petitioner contended that the notice demands several documents which were already made available while conducting anti-evasion action and notices were issued to the petitioner under Section 73 of the CGST Act, whereafter tax demand from the period 2017-18 up to 2021-22, amounting to Rs.70,35,44,181/- and interest amounting to Rs.43,29,194/- was raised and deposited by the petitioner.
The petitioner submitted that after the proceedings had ended, a fresh proceedings under Section 65 of the GST Act ought not have been initiated, and it is a cause of great harassment to the petitioners, who are ready to get an audit done for the year 2022-23.
The petitioner contended that for FY 2018-19, a demand has been raised totalling to Rs.94,86,762/-, which was later on dropped, and an amount of Rs.11,84,867 was confirmed towards the excess Input Tax Credit (ITC). There was no occasion for the respondents to initiate the audit afresh for the concerned Financial Year 2017-18 to 2021-22.
The court while rejecting the contention of the assessee stated that the respondents have already taken action under Section 73 of the CGST Act, would not be a ground to restrain the authorities from conducting audit, as the audit may result in detection of tax not paid or short paid or erroneously refunded or it may be even otherwise, to the benefit of the concerned registered person.
The court while refusing to interfere in the proceedings held that in the event that it is found that the tax has been evaded fraudulently, the power is available to the Department to initiate proceedings under Section 74 of the CGST Act, independent of the proceedings which may have been undertaken under Section 73 of the CGST Act.
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Case Details
Case Title: MAG Filters And Equipments Private Limited Versus Commissioner Of CGST Audit Gurugram And Other
Case No.: CWP-33348-2024
Date: 11.12.2024
Counsel For Appellant: Kavita Jha, Senior Advocate
Counsel For Respondent: Sourabh Goel, Senior Standing Counsel
