While dismissing the Writ petition, the Punjab & Haryana High Court has held that the Good and Service Tax (GST) department cannot be prevented from conducting preliminary inquiry relating to books of accounts of a registered person.
MAG Filters And Equipments Private Limited, the petitioner/assessee challenged the proceedings initiated by the respondents under Section 65 of the CGST Act, 2017, for conducting audit. It was submitted 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.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
After the end of the proceedings, 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.
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.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
While rejecting the contention of the assessee,the court held 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 bench observed that the audit is related 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.
Become a PF & ESIC expert with our comprehensive course – Enroll Now
The division bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth has 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.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
