Can inspection can be conducted twice for a FY

[UDHAYKUMAR KANDASAMY]

Dear all,

Can inspection can be done under GST twice for the same FY when the first inspection was ready adjudicated as per provisions of law and order wad passed.

In Sept 2022 inspection was conducted covering FY 2017-18 to FY 2021-22 as per GST act and order was issued and the order is in appeal as of today.

Inspection for the FY 2018-19 to FY 2024-25 was conducted in the 3rd week of April 2025 for the same assessee.

Whether it is possible to conduct inspection again for FY 2018-19 to FY 2021-22 for the same assessee?

Is it valid under GST Act?

Please clarify.

Thanks

[Sadanand Bulbule]

Yes. Any number of inspections can be conducted for the same year under Section 67 of the CGST Act, provided there are valid reasons to believe that any person is engaged in the evasion of tax. Normally repeated inspections for the same year are conducted only based on incriminating material manifest in the hands of the IO. And such person can also ask the IO to reveal the reasons for repeated inspections.

[KASTURI SETHI]

Dear Querist,

Are you talking of Audit or Inspection ? 

[YAGAY andSUN]

The situation you’ve outlined involves the possibility of conducting a second inspection for the same financial years (FY 2018-19 to FY 2024-25) after an initial inspection for the period FY 2017-18 to FY 2021-22, where an order has already been passed and is under appeal.

Let’s break this down and analyze it under the provisions of the Goods and Services Tax (GST) Act.

1. Inspection and Adjudication Under GST Act:

Under the GST Act, an inspection of records, goods, or business premises can be conducted by tax authorities for various purposes such as verification of compliance, audit, and enforcement of provisions of the Act. The general provisions around inspections are outlined in Section 67 of the CGST Act, 2017, which grants powers to officers to inspect goods and documents.

The inspection process typically includes:

• Section 67(1): The officer may inspect business premises for the purpose of verifying the correctness of tax paid, returns filed, or the accuracy of the records.
• Section 67(2): In case of the inspection of goods or documents, an authorised officer can seize goods if there is reason to believe that they are in contravention of the Act.

2. Adjudication and Appeal:

Once an inspection is conducted, an adjudication order may be issued based on the findings, and the assessee has the right to appeal against such an order under Section 107 of the CGST Act.

You mentioned that an order has already been issued in September 2022 for the period FY 2017-18 to FY 2021-22, and it is currently under appeal.

3. Can a Second Inspection be Conducted for the Same Period (FY 2018-19 to FY 2021-22)?

General Principles Under GST:

• No Repetitive Inspections for the Same Period: The GST Act does not permit repeated inspections or audits for the same period unless there is a specific reason or new evidence that justifies reopening the investigation for that period.
  • Finality of Adjudication: Once an adjudication order is passed for a particular period, and the matter is under appeal, there should not normally be any subsequent inspection or audit for the same period, as the issue is already being contested in the appeal process.
• Reopening an Assessment or Inspection: As per Section 73 and 74 of the CGST Act, an assessment can be reopened if the authorities have evidence of tax evasion or under-reporting of taxes. However, this should only apply if new facts or evidence have come to light or if there is an indication of fraud or wilful misrepresentation.
  • If the appeal is still pending, and no new facts or substantial evidence are available, the re-opening of the inspection for FY 2018-19 to FY 2021-22 would not be valid unless the appeal order directs a re-examination or review.

Possibility of Inspection for a New Period (FY 2022-23 and onwards):

• Inspection of New Periods (FY 2022-23 and onwards): As per your query, a second inspection was conducted in April 2025 for FY 2018-19 to FY 2024-25. Assuming this inspection was conducted separately for new years (FY 2022-23 and beyond), it would be valid as long as it was in accordance with the powers under Section 67 (inspection, search, and seizure provisions).
  • Note: This inspection must be for different years (FY 2022-23 onwards) and should not overlap with the years already under adjudication (FY 2017-18 to FY 2021-22), unless the tax authorities have a legitimate reason or new evidence linking the previous period to the new one.

Validity of Re-inspection for FY 2018-19 to FY 2021-22:

• If no new evidence: If the inspection for FY 2018-19 to FY 2021-22 was already done, and the adjudication order is passed (or is in the process of being appealed), the tax authorities cannot inspect the same period again unless new evidence or fraud is discovered.
• If new evidence exists: If the authorities have substantial evidence showing that there were discrepancies, misrepresentation, or fraud during the previous inspection period, they could initiate a new inspection or audit for the same period.

4. Conclusion:

• Second inspection for the same period (FY 2018-19 to FY 2021-22): Normally, under the GST Act, a second inspection cannot be conducted for the same period once an adjudication order has been issued and is under appeal, unless new facts or evidence emerge that justify such an action.
• Inspection for new periods (FY 2022-23 and onwards): The inspection for FY 2022-23 to FY 2024-25 is valid, assuming it is not a mere continuation of the earlier inspection, and the scope and period of inspection are clearly delineated.

If the authorities are seeking to inspect the same period again (FY 2018-19 to FY 2021-22) without new evidence, it could potentially be challenged by the assessee on the grounds of procedural impropriety and repetition of actions for the same period.

It is advisable for the assessee to consult with a tax expert or lawyer, especially to address potential overlaps and contest actions under appeal.

***

[UDHAYKUMAR KANDASAMY]

Dear Sir,

With reference to the reply No.2 by Kasturi Sethi Sir, It is inspection they are conducting for the FY 2018-19 to FY 2024-25.

Thanks

[UDHAYKUMAR KANDASAMY]

Dear M/s. Yagay and Sun,

Thanks for your detailed reply to the above subject. W.r.to the above reply, whether at any point during the inspection is conducted, we can know the new material evidence for conducting inspection for previous years?.

They have informed that inspection is conducted for FY 2018-19 to FY 2024-25 as per material information available with them (they don't even know that there was an inspection already conducted until the time we have informed them). They also informed that they will not get into the issues which was covered (SCN of first inspection) in the earlier inspection hence they are covering the areas which are not touched in the first inspection.

The authorisation for inspection as per our assumption is for FY 2018-19 to FY 2024-25 together. There is no mention about that they are conducting second inspection for the FY 2018-19 to FY 2021-22.

Anyhow we are informing in our written statement that inspection was conducted already for the FY 2017-18 to FY 2021-22 and matter was in appeal. This is to have some safeguard for the previous financial years upto 2021-22.

Thanks

[Fathima Thabsheera]

Background:
An inspection under Section 67 of the Central Goods and Services Tax Act, 2017 was conducted in September 2022 covering the period from FY 2017-18 to FY 2021-22. An adjudication order was passed thereafter, which is presently under challenge in appeal. Subsequently, another inspection was conducted in April 2025 for the period FY 2018-19 to FY 2024-25, resulting in overlapping of FY 2018-19 to FY 2021-22, which had already been subject to previous inspection and adjudication.

Reply:

As per the provisions of the CGST Act, 2017, particularly Section 67, inspection can be initiated where the proper officer has "reasons to believe" that certain prescribed conditions exist, such as tax evasion, suppression, or contravention of the Act. However, once an inspection has culminated in an adjudication order for a particular period, and the matter is under appeal, conducting a second inspection for the same period, on the same facts and grounds, is not envisaged under the Act.

The principle of res judicata (a matter already adjudicated) and the doctrine against double jeopardy (nemo debet bis vexari pro eadem causa – no person should be vexed twice for the same cause) would apply. The Hon'ble Supreme Court in CCE v. ITC Ltd. [1994 (74) E.L.T. 41 (S.C.)] held that once a matter is adjudicated, the same cannot be reopened unless there is fresh evidence of fraud, collusion, suppression of facts, or misstatement.

Similarly, in Euphoria Technologies Pvt Ltd v. Union of India [2022-TIOL-2350-HC-MUM-GST], the Hon'ble Bombay High Court emphasized that repeated inspection or search proceedings for the same period and cause without new material is impermissible under GST law.

Therefore, unless the second inspection is based on fresh cause of action, new material evidence, or aspects not examined earlier, a repeat inspection for FY 2018-19 to FY 2021-22 would not be legally sustainable under the GST Act.

Conclusion:
In absence of any new grounds or fresh cause, the second inspection covering FY 2018-19 to FY 2021-22 is not valid and may be challenged as being contrary to the settled legal principles and provisions of the CGST Act, 2017.

AI Summary

Tax Authority's Repeated Inspection Raises Legal Concerns Over Overlapping Financial Years and Potential Procedural Overreach A tax authority conducted an inspection for financial years 2017-18 to 2021-22, issuing an adjudication order under appeal. Subsequently, another inspection was initiated for financial years 2018-19 to 2024-25, creating potential overlap. Legal experts suggest repeated inspections for the same period are generally impermissible without new material evidence, as per GST Act provisions and judicial precedents emphasizing principles of res judicata and preventing double jeopardy.