Revisional power under GST cannot replace Sections 73 and 74 proceedings after an audit reveals tax irregularities.

After an audit disclosed alleged unpaid tax, short payment, erroneous refund, or wrongful input tax credit, the statute required the proper officer to initiate proceedings under Sections 73 or 74 of the Karnataka GST Act. Revisional proceedings under Section 108(1) could not be used as a substitute for those recovery provisions when no action under Sections 73 or 74 had first been taken. The revision notice issued solely on the basis of the audit report was therefore held impermissible, and the revisional order was declared illegal, arbitrary, and without authority of law.

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Issues: Whether revisional proceedings under Section 108(1) of the Karnataka Goods and Services Tax Act, 2017 could be initiated on the basis of an audit report without first initiating action under Sections 73 or 74 of the Karnataka Goods and Services Tax Act, 2017.

Analysis: The audit proceedings had culminated in an audit report, but no proceedings under Sections 73 or 74 had been initiated before the revision notice was issued. Section 65(7) contemplates that where an audit discloses unpaid tax, short-paid tax, erroneous refund, or wrongful availment or utilisation of input tax credit, the proper officer is to initiate action under Sections 73 or 74. In that statutory setting, initiation of revisional proceedings without first invoking the statutory recovery provisions was held to be impermissible.

Conclusion: The revisional order was held to be illegal, arbitrary, and without authority of law, and the challenge succeeded.

Ratio Decidendi: Where the statute specifically requires action under Sections 73 or 74 after an audit reveals tax irregularities, revisional power cannot be exercised as a substitute for those proceedings.

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