2023 (5) TMI 589 - HC - GST

Tax Audit Notice Stands: Revenue Authorities Empowered to Conduct Additional Scrutiny Under GST Act Section 65(3)

HC upheld the legality of a tax audit notice under Section 65(3) of U.P. GST Act, 2017. Despite prior proceedings under Section 74, the court found no ... Audit by Tax Authorities - Exercise of jurisdiction under Section 65 of UPGST Act, by way of necessary implication - petitioner already been subjected to the proceedings of adjudication under Section 74 of the U.P.G.S.T Act, 2017 - HELD THAT:- There is no material shown to exist that any earlier audit had been permitted or directed under Section 65 of the Act and insofar as plain reading of the provisions do not suggest any bar in exercise of that power, if the assessee had faced any earlier proceedings under Section 74 of the Act with respect to Input Tax Credit, excess claimed, there is no inherent legal infirmity shown to exist in the audit having been directed, keeping in mind the language of the statute. As to facts, nothing has been pleaded as may lead this Court to a conclusion that the audit directed is either not permissible or is not warranted, either in view of earlier proceedings suffered by the petitioner under Section 74 of the Act, or otherwise. Plainly facts pleadings to assail the audit (as directed), are missing. No good ground is made out to offer any interference in exercise of extra ordinary jurisdiction under article 226 of the Constitution as that jurisdiction may be exercised if a legal injury is shown to exist, that too caused contrary to the provisions of law. Petition disposed off. Issues involved:The issues involved in the judgment are the legality of a notice issued under Section 65(3) of the U.P. Goods and Services Tax Act, 2017 and whether the revenue authorities can exercise jurisdiction under Section 65 of the Act after proceedings under Section 74 have taken place.Judgment Summary:Issue 1: Legality of the notice under Section 65(3) of the U.P. Goods and Services Tax Act, 2017The petitioner sought relief against a notice issued under Section 65(3) of the Act. The petitioner argued that since proceedings under Section 74 had already taken place, the revenue authorities were precluded from exercising jurisdiction under Section 65. The Standing Counsel opposed, stating that the audit directed did not result in any adverse conclusion, thus no legal injury was caused to the petitioner. The court observed that there was no bar in exercising the power under Section 65, especially when no earlier audit had been permitted or directed. The court found no legal infirmity in the audit being directed, as the language of the statute did not prohibit it.Issue 2: Jurisdiction of the revenue authorities under Section 65 after proceedings under Section 74The court noted that there was no material to suggest that an earlier audit had been permitted under Section 65. It stated that the audit directed was permissible, considering the lack of inherent legal infirmity. The court emphasized that the petitioner failed to provide facts to show that the audit was not warranted, especially in light of earlier proceedings under Section 74. As no legal injury contrary to the provisions of the law was demonstrated, the court found no grounds to interfere using its extraordinary jurisdiction under Article 226 of the Constitution.In conclusion, the court disposed of the petition, ruling that the audit directed under Section 65(3) of the U.P. Goods and Services Tax Act, 2017 was legally permissible, and no interference was warranted under Article 226 of the Constitution due to the absence of a legal injury caused contrary to the provisions of the law.