Case Law Details
P S K Engineering Construction & Co. Vs Assistant Commissioner of GST & Central Excise (Madras High Court)
The Madras High Court recently addressed the issue of audit powers under Section 65 of the CGST Act in the case of P S K Engineering Construction & Co. vs Assistant Commissioner of GST. The petitioner challenged a notice issued by the Central GST authorities while State GST proceedings on similar grounds were ongoing.
The petitioner argued that the initiation of Central GST audit proceedings, despite ongoing State GST assessments for multiple years, violated Section 6(2)(b) of the CGST Act. This section prohibits dual proceedings by different GST authorities on the same subject matter.
The court examined the scope of Section 6(2)(b) and clarified that it restricts simultaneous proceedings only on identical subject matters. The audit notice, reviewed by the court, clearly stated its intention to proceed under Section 65 of the CGST Act, asserting that the subject matter was different from that under review by State authorities.
In its judgment, the Madras High Court disposed of the petition, allowing the audit to proceed under Section 65 of the CGST Act. The court emphasized that unless the subject matter of the audit overlaps with ongoing State GST proceedings, Central GST authorities are within their rights to conduct audits independently. This decision reinforces the statutory framework’s provisions on audit powers under CGST, ensuring clarity on jurisdictional issues between Central and State GST authorities.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
A notice under Section 65 of the Central Goods and Services Tax Act, 2017 (the CGST Act), is the subject of challenge in this writ petition.
2. By stating that State GST authorities initiated proceedings against the petitioner in respect of assessment years 2019-20, 2020-21, 2021-22 and 2022-23 and that such proceedings culminated in orders dated 29.02.2024, the present writ petition was filed on the ground that Central GST authorities cannot initiate proceedings in spite of the same subject matter.
3. Learned counsel for the petitioner referred to the show cause notices and orders issued by the State GST authorities and contended that such proceedings were comprehensive and that the Central GST authorities are endeavoring to resurrect the same issues. He further
4. Rajendran Raghavan, learned senior standing counsel, accepts notice for the first respondent and Mr. V.Prashanth Kiran, learned Government Advocate, accepts notice for respondents 2 to 4.
5. Mr. Rejendran Raghavan and Mr. V. Prashanth Kiran pointed out that the prohibition under Section 6(2)(b) of the CGST Act would apply only if the subsequent proceedings by the Central GST authorities are on the same subject matter. At this juncture, they submit that the scope of audit cannot be second-guessed.
6. On perusal of the impugned audit notice, it is clear that such notice was issued while being fully aware of Section 6(2)(b). After extracting the said provision, it is recorded, in relevant part, as under:
“… However, there is no restriction to initiate any proceeding on any other subject matter by Central Tax Authority. Accordingly, this office is intended to conduct audit under the provisions of section 65 of CGST Act as usual.”
7. Provided the subject matter of audit is not the same subject matter as proceedings initiated by the State GST authorities, there is no restriction in the statute. Therefore, subject to the said observation, W.P.No.13418 of 2024 is disposed of by leaving it open to the petitioner to respond to the audit notice. Consequently, W.M.P.Nos.14578 & 14579 of 2024 are closed. No costs.
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