Can the same officer who conducted the audit U/S 65 of CGST/SGST Act also adjudicate the raised paras U/S Section 73 ?

[Gautam Godhwani]

Vide Circular No.169/01/2022-GST it was stated that the auditing officer can issue the SCN but not adjudicate the proceedings. The adjudication would be done by the proper officer under whose jurisdiction the RTP falls.

As per the Model All India GST Audit Manual 2023, at Pg 62 : 'It is the administrative decision of the respective State whether the audit officer will subsequently adjudicate or that will be done by a separate officer.'

Thus the first contemplates a situation where auditing officer can be the adjudicating officer but in the latter this is not permissible. What is the current factual situation ? Would one have to check the State GST Audit Manuals to know the position ?

[Padmanathan KV]

My observations and views on the same are as follows:

1. All India/ State GST Audit Manuals does not have any force of law and are not binding.

2. Both Circular 169/2022-GST which amends Circular 31/05/2018-GST are not issued under section 168 of CGST Act.

3. Regardless, I hold the view that Auditing officer should not adjudicate the proceedings as it would suffer from inherent bias. It must be adjudicated by some other officer.

4. Technically speaking, the law does not place any such restrictions, as understood from views of experts in this forum in another issue id.

[KASTURI SETHI]

Recently I have come by a case wherein the Audit Team detected a short levy. The FAR issuing Authority (Audit Officer) ,the SCN issuing Authority and Adjudicating Authority is the same officer by name and designation both. The case pertains to State GST.

As per principles of natural justice, the SCN issuing and the Adjudicating Authority should not be the same officer but Statutorily there is no restriction. This practice has been going since the inception of the Central Excise department. I have also come by case laws wherein CEGAT/CESTAT objected to this practice.

.In my view there is no statutory problem. It is internal administrative control of the department.

As per literal meaning the term, 'Natural Justice' stands for common sense justice. The principles/rules of natural justice are not codified principles/rules. This term relates to moral conscience.

"The principles of natural justice have come to be recognized as being part of the guarantee contained in Article 14 of the Constitution of India .................." Supreme Court in the case of UOI Vs. Tulsiram Patel 1985 (7) TMI 371 - SUPREME COURT.

[Sadanand Bulbule]

Dear all

It has become unwritten rule that, the audit authority under Section 65 is also the adjudicating authority under Section 73/74, even the inspecting authorities too. In many States, all officers are appointed as adjudicating authorities! However there is no such embargo under the Act. The All India GST Audit Manual is only a "model". What is legally practical should be the model. Although models look beautiful, most of the times they are unworkable.

The principles of adjudication fairness are antiquated.

[Gautam Godhwani]

Respected Kasturi Sethi Sir, could you please provide specific case laws in which such objections were placed by the authorities ? It would be very helpful.

[KASTURI SETHI]

Dear Sir,

I shall try my best to trace out the judgement. I also need the same in my client's appeal.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, You mean to say principles of natural justice are pipe dreams.

[Sadanand Bulbule]

Dear sir ji

Even the laws of war speak what is fair and unfair. And after all, adjudication of tax, where fairness of law plays significant role to prevent apprehension of trauma and damage of justice. So adjudicating authority is required to implement the law as it is and not to make afresh one.

The principles of natural justice are as wide as space. Justice is the final destination in any decision process, be it may legal affairs or private. This is no at all a debatable issue.

These days, the concept of principle of natural justice is melting like a brief candle.This is really serious worry.

[KASTURI SETHI]

Dear Sir,

All is not bad. Still there are Officers in the department who stick to their principles of impartiality, honesty and integrity and adjudicate the SCNs on merits.

AI Summary

Debate on whether the same officer can audit under Section 65 and adjudicate under Section 73 of the CGST/SGST Act. A discussion on whether the same officer who conducts an audit under Section 65 of the CGST/SGST Act can also adjudicate issues under Section 73. Participants noted that while the All India GST Audit Manual suggests separation of roles, there is no statutory restriction against the same officer performing both functions. Concerns were raised about potential bias and the principles of natural justice, which suggest that the roles should be separate to ensure fairness. However, in practice, many states appoint the same officer for both roles. The debate highlights the tension between legal guidelines and practical implementation.