2024 (1) TMI 1098 - HC - GST

Supreme Court Halts Tax Audit Proceedings, Mandates Fair Resolution and Prevents Parallel Investigations Under CGST Rules

SC directed SGST Authority to suspend proceedings related to a specific audit memo discrepancy. The court halted the show cause notice and mandated ... Abeyance of proceedings pending adjudication by another authority - preclusion of concurrent adjudication on the same subject-matter - overlapping jurisdiction of SGST and CGST authorities - comity between fiscal authoritiesAbeyance of proceedings pending adjudication by another authority - preclusion of concurrent adjudication on the same subject-matter - Whether the audit wing of the State GST Authority must keep its proceedings in abeyance in respect of discrepancy note no. 3 pending adjudication by the CGST Authority. - HELD THAT: - The appellant informed the State GST audit wing that the identical subject-matter (discrepancy no. 3) was the subject of a show cause notice issued by the anti-evasion wing of the CGST Department dated 28.03.2023, to which the appellant had replied and which was then pending adjudication before the fourth respondent. The State audit wing had not taken note of the appellant's submission and proceeded to issue its own show cause notice dated 29.12.2023 in respect of the same discrepancy. The Court held that where the identical issue is under adjudication before the CGST Authority, the audit wing of the SGST Authority ought to keep its proceedings in abeyance in respect of that discrepancy to avoid concurrent adjudication and to abide by the adjudication to be rendered by the CGST Authority on the show cause notice dated 28.03.2023.Proceedings of the SGST audit wing in respect of discrepancy note no. 3, including the show cause notice dated 29.12.2023, are to be kept in abeyance and the SGST authority shall abide by the adjudication to be passed by the CGST Authority on the show cause notice dated 28.03.2023.Final Conclusion: The appeal and connected writ petition are disposed of by directing the State GST audit wing to keep all proceedings relating solely to discrepancy note no. 3 in abeyance and to abide by the adjudication of the CGST Authority on the show cause notice dated 28.03.2023 (financial years 2017-2018 to 2021-2022). Issues involved: Appeal against denial of interim relief in WPA 26410 of 2023 due to discrepancies in audit memo and show cause notice by CGST Authority.Summary:The appeal was filed against the order declining interim relief, and both the appeal and writ petition were taken up together for disposal. The appellant received an audit memo highlighting discrepancies, particularly focusing on one discrepancy. The appellant informed the SGST Authority that a show cause notice had been issued by the anti-evasion wing of the CGST Department, covering the same issues, for the financial years 2017-2018 to 2021-2022, and the matter was pending adjudication. The appellant replied to the show cause notice on 4th May, 2023, and the matter was under adjudication by the CGST Authority. The audit wing of the State GST Authority failed to acknowledge the appellant's reply and issued a show cause notice on 29.12.2023 concerning the same discrepancy. The court directed the audit wing of the SGST Authority to suspend all proceedings related to the specific discrepancy noted in the audit memo, including the show cause notice dated 29.12.2023, and to abide by the adjudication order to be issued by the CGST Authority on the show cause notice dated 28.03.2023.