GST revisional power cannot revise audit findings before Section 73 or 74 proceedings; jurisdictional notice quashed.

The Karnataka HC held that revisional power under Section 108 of the GST law cannot be used to revise an audit observation or audit report when no proceedings under Sections 73 or 74 have been initiated. Where an audit reveals unpaid tax, short payment, erroneous refund, or wrongful input tax credit, the statute requires recourse to the specific recovery provisions, and a notice issued outside that sequence is without authority of law. The Court also held that the availability of a reply to the show cause notice did not bar writ jurisdiction because the notice itself lacked jurisdiction. The revisional notice was quashed, with liberty to proceed in accordance with law.

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Issues: Whether revisional powers under Section 108 of the GST law can be invoked to revise an audit observation or audit report without first initiating proceedings under Sections 73 or 74, and whether a writ petition is maintainable against such notice on the ground of lack of jurisdiction.

Analysis: The audit process had culminated in an audit report, and no proceedings under Sections 73 or 74 had been initiated when the revisional notice was issued. Section 65(7) contemplates that when an audit reveals unpaid tax, short payment, erroneous refund, or wrongful availment or utilisation of input tax credit, the proper course is action under Sections 73 or 74. On that footing, invoking Section 108 to revise an audit report or audit observation was held to be impermissible and without authority of law. The availability of a reply to the show cause notice did not bar exercise of writ jurisdiction where the notice itself was issued without jurisdiction.

Conclusion: The revisional notice was quashed as being without jurisdiction, and the petition was allowed, with liberty reserved to the respondent to proceed in accordance with law.

Ratio Decidendi: A revisional power cannot be used to revise an audit report where the statute requires the revenue to proceed, if at all, under the specific recovery provisions triggered by audit findings; a notice issued in breach of that statutory sequence is liable to be struck down in writ jurisdiction notwithstanding alternate remedy.

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