Validity of Tax Audit Notice Upheld: Court Clarifies Time Limit

The Court upheld the legality of the notice issued by the Assistant Commissioner for Central Excise and Service Tax Audit, dismissing the writ petition challenging its jurisdiction. It clarified that the power for audit functions by C.B.E. & C. over taxpayers previously registered with Central Excise and Service Tax ceases after one year as per the Constitution (ONE HUNDRED AND FIRST AMENDMENT) Act, 2016. The Court emphasized that Section 174(2) of the CGST Act allows investigations, audits, assessments, and legal proceedings to continue unaffected by amendments or repeals.

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Issues:
1. Legality of notice issued by Assistant Commissioner for Central Excise and Service Tax Audit.
2. Interpretation of Section 174(2)(e) of the Central Goods and Services Tax Act, 2017.
3. Application of Section 19 of the Constitution (ONE HUNDRED AND FIRST AMENDMENT) Act, 2016.

Analysis:
1. The petitioner challenged the legality of a notice issued by the Assistant Commissioner, Audit Circle, Udaipur, regarding the Central Excise and Service Tax Audit of their unit for a specific period. The petitioner contended that the audit functions for the previous period should be under the administration control of C.B.E. & C. as per Section 174(2)(e) of the CGST Act.

2. The Court examined Section 174(2)(e) of the CGST Act and noted that the power for audit functions for the previous period continues to be exercised by C.B.E. & C. over taxpayers previously registered with Central Excise and Service Tax. However, the Court highlighted that the power does not survive after the expiry of one year as per Section 19 of the Constitution (ONE HUNDRED AND FIRST AMENDMENT) Act, 2016.

3. Section 19 of the Constitution Act, 2016, is a transitional provision saving any law relating to tax on goods or services inconsistent with the amended Constitution for a year unless amended or repealed. The Court clarified that this provision does not restrict the operation of Section 174(2) of the CGST Act, which allows for investigations, audits, assessments, and legal proceedings to continue unaffected by amendments or repeals.

4. The Court concluded that the impugned notice for audit issued by the Assistant Commissioner, CGST, Audit Circle, Udaipur was not issued without jurisdiction. The Court dismissed the writ petition, upholding the legality of the notice based on the interpretation of relevant provisions of the CGST Act and the Constitution Act, 2016.

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