GST Audit Findings Do Not Trigger Recovery Without Further CGST Action: Bombay HC

SVS Aqua Technologies LLP Vs Superintendent (Bombay High Court)

Summary: The Bombay High Court considered a writ petition filed by M/s. SVS Aqua Technologies LLP concerning an audit conducted under Section 65 of the Central Goods and Services Tax Act, 2017. The petitioner contended that, based on the audit findings, the authority had proceeded directly to recovery without any adjudication proceedings under Section 73 or Section 74 of the CGST Act, which the petitioner submitted was impermissible.

The respondents submitted that the impugned communication was, in all probabilities, only an administrative action which would culminate in a show cause notice for adjudication, and that if this was so, nothing would survive for consideration in the writ petition. The Court found substance in this submission. It held that the notice was clearly issued under Rule 101(5) of the Central Goods and Services Tax Rules, 2017, which requires the proper officer, on conclusion of audit, to inform the registered person of the audit findings in accordance with Section 65(6) in FORM GST ADT-02.

The Court further held that the apprehension that recovery would be effected merely on the basis of the audit findings was misconceived. It observed that the GST Department would take further action in accordance with the provisions of the CGST Act. The writ petition was accordingly disposed of.