Case Law Details
Ashoka Fabricast Pvt Ltd Vs Union of India (Rajasthan High Court)
In the case of Ashoka Fabricast Pvt Ltd vs Union of India, the Rajasthan High Court deliberated on the contentious issue of whether an audit under Section 65 of the CGST Act could be conducted after the cancellation of registration. The petitioner contested the legality of an audit notice issued post-registration cancellation.
The petitioner argued that since they had cancelled their GST registration, they were no longer liable to undergo an audit under Section 65 of the CGST Act, which applies only to registered persons. However, the respondents contended that the cancellation of registration does not absolve the petitioner from their tax liabilities accrued during the registration period.
The court examined Section 65(1) of the CGST Act, which empowers authorities to audit any registered person for a specified period. It also considered Section 29(3), which clarifies that cancellation of registration does not discharge liabilities incurred before cancellation. The respondents asserted that the audit was valid as it pertained to the period when the petitioner was registered.
The judgment highlighted that despite cancellation, liabilities for the period of registration persist under the CGST Act. The court noted that the audit process was duly followed, including issuing a show cause notice and considering the petitioner’s objections. It cited precedents and legislative intent to affirm that audit rights extend to periods when the entity was registered, regardless of subsequent registration cancellation.
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