GST Orders Cannot Survive Pending KVAT Return Revision: Kerala HC

Bhima Enterprises Vs Deputy Commissioner-1 (Kerala High Court)

The Kerala High Court considered two connected writ petitions filed by an assessee engaged in the business of trading in gold jewellery and registered under the KVAT Act, 2003, the CST Act, 1956, and the CGST/SGST Acts. The dispute related to the assessment year 2017–18, specifically the months of April, May, and June 2017. The petitioner stated that certain inward and outward stock transfer transactions had been inadvertently omitted while filing returns and therefore submitted an application seeking permission to revise the returns.

The Assessing Authority rejected the revision application through proceedings dated 04.02.2021 on the sole ground that the petitioner’s books of account had not been audited under Section 42 of the Act. The petitioner challenged this rejection order as well as the consequential pre-assessment notice issued under Section 25(1) of the KVAT Act.

The second writ petition arose from proceedings initiated under the GST Act. The CGST Assessing Authority issued notices alleging that the petitioner had effected stock transfers of goods outside the State without material to establish that the goods had subsequently been brought back to Kerala. Based on this adverse presumption, notices and consequential orders were issued. The petitioner contended that if the request for revision of the earlier KVAT returns were accepted, the GST proceedings would also require reconsideration.