Show Cause Notice under GST

[Krishna Murthy]

Sir, can a Proper Officer (PO) issue SCN based on the objections raised by the AG Audit objections. There was an issue with regard to interest payable and the PO clearly states in the SCN that the said objection was raised by the AG Audit. If the PO acts solely upon the AG Audit objections, does it not mean that there is no proper application of mind by himself while making assessment. Would this be a valid ground for issue of SCN.

[KASTURI SETHI]

Dear Krishna Murthy Ji,

Yes, It is a valid ground. Regarding non-application of mind by the officers of the department go through the following :-

You are not aware of the internal mechanism of the department and the powers of CAG. AG (Audit) is a wing of CAG. AG (Audit) has been empowered to conduct audit of all the units ( on selective basis also), in addition to the internal audit being conducted by the department. This wing also conduct audit of all Range Offices and different branches of the department. AG office also keeps check on pendency position in the office. In case any short levy/non-levy is detected by AG Office in respect of any unit and confirmed by way of adjudication/Appellate Authorities, charge sheet is issued to the erring officer posted in Range and Internal Audit wing of the department.

Thus AG (Audit) has supervisory powers over Central Excise, Customs, Service Tax and CGST/SGST Offices.

[Ganeshan Kalyani]

I agree with Sri Kasturi's view.

[Himansu Sekhar]

Show cause notice is a notice and not an assessment order. All the facts can be brought before the adjudicating authority who can also examine these issues. No need to panic

AI Summary

Non-application of mind in issuing show-cause notices based solely on audit objections can constitute a valid ground for challenge.
A show-cause notice issued solely on objections from an external audit wing may reflect non-application of mind by the issuing officer and therefore be a valid ground for challenge; the audit wing conducts supervisory audits that detect short levy/non-levy and can prompt departmental action. However, a show-cause notice is procedural and the adjudicating authority may examine all facts and legal contentions raised, so affected persons should present detailed replies during adjudication.