Audit wing of SGST Authority shall keep all proceedings in abeyance if the subject matter is pending before the CGST Authority
The interplay between State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) authorities in India’s tax ecosystem often leads to legal complexities. A recent judgment by Hon’ble High Court of Calcutta in Mahabir Prasad Kedia v. Assistant Commissioner of State Tax [MAT No. 2388 of 2023 dated January 9, 2024] sheds light on a crucial aspect: the abeyance of proceedings by the SGST Authority when a matter is pending before the CGST Authority. Hon’ble High Court of Calcutta held that the Audit Wing of the State Goods and Services Tax (“SGST”) Authority should keep the proceedings in abeyance if the subject matter was pending before the Central Goods and Services Tax (“CGST”) Department.
Mr. Mahabir Prasad Kedia (“the Appellant”) was issued an audit memo in which several discrepancies were pointed out. The Appellant on receiving the said audit notice informed the SGST Authority that over the same issue a show cause notice (“the SCN”) had been issued by the anti-evasion wing of CGST Department dated March 28, 2023 (“the Impugned SCN”) for the financial years 2017-2018 to 2021-2022 wherein all the points as mentioned in the audit memo were considered and the same was under adjudication. The Appellant gave a reply to the Impugned SCN on May 04, 2023. The matter was now pending for adjudication. Over such a reply given by the Appellant, the audit wing of the SGST Authority was of the opinion that it was not clear from the reply given by the Appellant that the discrepancy was settled. The audit authority failed to take note of the submission made by the Appellant and the subject matter was pending for adjudication by the CGST Authority, who has issued the Impugned SCN on which the reply was submitted by the Appellant on May 02, 2023.
Therefore, the Hon’ble Calcutta High Court held that the audit wing of the SGST Authority should keep the matter abeyance so far as the discrepancy note is concerned. The authority now has issued an SCN dated December 29, 2023, since the discrepancy pointed out by the Audit Wing of the SGST Authority is the subject matter of adjudication by the CGST Authority. According to the Impugned SCN, the audit wing of the SGST Authority should not proceed. Accordingly, the appeal along with the connected application and the writ petition was disposed of by directing the audit wing of the SGST Authority to keep in abeyance all proceedings in respect of the discrepancy note no.3 alone including the show cause notice dated December 29, 2023, and abide by the adjudication order to be passed by the CGST Authority, on the Impugned SCN.
Conclusion: The ruling by the Hon’ble High Court of Calcutta clarifies the protocol to be followed by SGST Authority in cases where matters are concurrently under consideration by the CGST Department.
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