TaxTMI 
TaxTMI 
2026 (10) TMI 98
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....under Section 74 of the CGST Act. 2. The Petitioner has also challenged the Audit Report No. 111/2025-2026 dated 29.04.2025 and has sought, inter alia, a direction to the Respondents to consider the reply dated 18.06.2025 submitted by the Petitioner to the audit objections. The Petitioner has further sought a direction that the amount of Rs. 40,10,153/- deposited by it through Form GST DRC-03 on 25.03.2025 be not appropriated, as according to the Petitioner, the said amount was deposited under coercion. FACTUAL MATRIX: 3. In order to appreciate the controversy involved in the present Petition, the relevant facts, in brief, are required to be noticed. 4. The Petitioner is a private limited company stated to be engaged in the business of distribution of medicines. The audit proceedings in question commenced with the issuance of a Notice of Audit in Form GST ADT-01 dated 06.09.2024. The said notice was received by the Petitioner on 09.09.2024. According to the Petitioner, the audit was initially stated to cover the period from 01.04.2018 to 31.03.2023. 5. The Petitioner states that, pursuant to the aforesaid notice, various documents and information were furnished to th....
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....a further reminder was submitted on 25.04.2025. 10. In the meantime, an Audit Report dated 29.04.2025 was issued. The Petitioner states that the amount of Rs. 40,10,153/- which had already been deposited by it through Form GST DRC-03 was appropriated. The Petitioner further states that the detailed workings relied upon for arriving at the alleged liability were furnished to it only on 14.05.2025. According to the Petitioner, the supply of such material after issuance of the Audit Report deprived it of an effective opportunity to respond to the audit objections at the audit stage. 11. Thereafter, the Respondent issued an intimation in Form GST DRC-01A dated 02.06.2025, intimating the Petitioner of the proposed liability and calling upon it to make payment, failing which proceedings under Section 74 of the CGST Act would be initiated. The Petitioner submitted a detailed reply dated 18.06.2025. The reply, according to the Petitioner, comprised detailed submissions against each of the audit objections and was accompanied by supporting documents. The Petitioner also requested an opportunity of personal hearing. 12. In the said reply, the Petitioner disputed, inter alia, the inv....
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....on consideration of the matter at that stage, have proceeded to issue the Impugned SCN dated 27.06.2025 under Section 74 of the CGST Act. 19. Thus, the statutory adjudicatory proceedings contemplated under the CGST Act have already been set in motion. The Impugned SCN calls upon the Petitioner to show cause against the proposed demand. The issuance of a show cause notice, by itself, does not amount to determination of the liability of the Petitioner. The allegations and proposals contained therein remain to be adjudicated upon by the competent authority in accordance with law. 20. The distinction between an audit proceeding and the subsequent adjudicatory proceeding is material in the present case. The Audit Report constitutes the outcome of the audit process. However, once proceedings under Section 74 of the CGST Act have been initiated by issuance of a show cause notice, the Petitioner has an opportunity to place before the adjudicating authority all objections which it seeks to raise against the proposed demand. 21. The Petitioner has, in fact, already prepared and placed on record a detailed response setting out its objections to the audit findings and the proposed lia....
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.... This would include its objections concerning the audit process, the alleged failure to consider its reply at the audit stage, the alleged coercion in respect of the payment of Rs. 40,10,153/-, the question of appropriation of the said amount, the alleged limitation in respect of Financial Year 2017-18, the computation of the proposed liability, as well as all other objections which may otherwise be available to the Petitioner in law. 28. It is clarified that this Court has not examined the merits of any of the aforesaid objections. No opinion is being expressed as to whether the payment of Rs. 40,10,153/- was voluntary or was made under coercion. Likewise, this Court has not examined the Petitioner's contention regarding limitation, the alleged jurisdictional objection to the audit, the correctness of the computation of the proposed demand, or the validity of the audit findings. All such issues are left open for consideration by the competent authority in accordance with law. 29. The Petitioner shall, therefore, be at liberty to place its objections before the Adjudicating Authority in response to the Impugned SCN. The Adjudicating Authority shall consider the objections....