Natural Justice Prevails: Tax Authority Ordered to Reconsider Audit Report After Overlooking Taxpayer's Response The HC found a violation of natural justice in the Final Audit Report. The tax authority failed to consider the taxpayer's reply to a discrepancy notice, ...
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Natural Justice Prevails: Tax Authority Ordered to Reconsider Audit Report After Overlooking Taxpayer's Response
The HC found a violation of natural justice in the Final Audit Report. The tax authority failed to consider the taxpayer's reply to a discrepancy notice, contrary to Rule 101(4). The court quashed the audit report and directed the respondents to review the reply, reconsider the audit findings, and proceed in accordance with legal provisions.
Issues Involved: The challenge to Final Audit Report based on violation of principles of natural justice.
Issue 1: Violation of Principles of Natural Justice - The petitioner challenged the Final Audit Report dated 22.12.2023 on the ground of violation of the principles of natural justice. - The petitioner had filed a reply dated 19.12.2023 to the discrepancy notice under Rule 101(4) of the Andhra Pradesh Goods and Services Tax/Central Goods and Services Tax Rules, 2017. - The Final Audit Report did not consider the petitioner's reply, stating that "the tax payer did not file any reply to the proposed notice." - The Court found that the Final Audit Report was in violation of the principles of natural justice and statutory provisions as the petitioner's reply was not considered. - As per Rule 101(4), discrepancies noticed should be informed to the registered person, who may file a reply that must be considered before finalizing the audit findings. - The Final Audit Report was quashed on the ground of not considering the petitioner's reply, and the respondents were directed to consider the reply and finalize the audit report before proceeding further.
Decision: - The writ petition was partly allowed, quashing the Final Audit Report on the basis of not considering the petitioner's reply to the discrepancy notice. - The respondents were instructed to consider the petitioner's reply, finalize the audit report, and proceed further in accordance with the law. - No costs were awarded in this matter, and any pending miscellaneous petitions were to be closed as a result of this judgment.
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