Abdur Rouf Khan Vs Superintendent of Central Tax (Calcutta High Court)
In a significant ruling for taxpayers, the Calcutta High Court has clarified the limitations on central GST authorities to conduct re-audits for periods already scrutinized by state authorities. In the case of ABDUR ROUF KHAN v. SUPERINTENDENT OF CENTRAL TAX & ORS., the court held that once an audit proceeding culminates in a final adjudication, central authorities are barred from reinitiating an audit for the same periods. This decision, delivered by Justice Raja Basu Chowdhury, hinges on the interpretation of Section 6(2)(b) of the CGST Act, 2017, which prevents central and state authorities from initiating proceedings on the same subject matter.
Background of the Case
The petitioner, Abdur Rouf Khan, challenged an audit observation from the Central Tax authorities for the financial years 2018-2019 and 2022-2023. The petitioner argued that the issues raised in this audit had already been addressed and decided by state GST authorities for the financial years 2017-2018, 2018-2019, and 2019-2020, under Section 73 of the CGST Act. The state’s proceedings were based on an enforcement case to verify the petitioner’s claim of exempted/nil rated supplies. The Central authorities, represented by their counsel, contended that the new audit was initiated under Section 65 of the Act and that since no final determination under Section 65(7) had yet been made, the petition was premature. They argued that the audit proceedings were statutorily sanctioned and therefore, there was no irregularity in initiating them.
The Court’s Analysis
Justice Chowdhury’s decision focused on the principle of non-duplication of proceedings as enshrined in Section 6(2)(b) of the CGST Act. The court noted that state authorities had already passed three separate orders under Section 73 covering the tax periods 2018-2019, 2019-2020, and 2020-2021. The central authorities had also previously conducted an audit and issued a show-cause notice and a subsequent order under Section 73 for the tax periods 2018-2019 to 2021-2022.
