Ayushi Galvano Vs Commissioner (Audit) (Orissa High Court)
The Orissa High Court considered a writ petition challenging an audit notice, audit report, and a consequent Demand-cum-Show Cause Notice issued under Section 73 of the Central Goods and Services Tax Act, 2017 and the Odisha Goods and Services Tax Act, 2017. The petitioner assailed the proceedings on the ground of a fundamental jurisdictional defect, contending that the audit report in Form GST ADT-02 had been issued by a Superintendent who was not authorised to do so under the statutory scheme. It was argued that, as per Rule 101 of the GST Rules read with Section 2(91) of the GST Act and Circular dated 5 July 2017, only a Deputy Commissioner or Assistant Commissioner is empowered to communicate audit findings to a registered person. Since the Superintendent was not a “proper officer” for this purpose, the subsequent initiation of proceedings under Section 73 was alleged to be vitiated at its root.
The Revenue fairly conceded before the Court that the legal position advanced by the petitioner was correct, though it argued that no prejudice was caused because the show cause notice under Section 73 had been issued by a competent authority. After examining Sections 65 and 73 of the GST Act along with Rule 101 of the GST Rules and the relevant circular, the Court found that the statute clearly requires audit findings to be communicated by a duly authorised proper officer. The Court observed that the Superintendent who issued the audit report was not notified as a proper officer for that purpose. On a prima facie assessment, the Court held that the defect went to jurisdiction and that allowing further adjudication on such a foundation could seriously prejudice the petitioner. Finding that a strong prima facie case and balance of convenience lay in favour of the petitioner, the Court directed that no further action be taken pursuant to the impugned Demand-cum-Show Cause Notice until the next date of hearing, while granting time to the Revenue to file a counter affidavit. The matter was directed to be listed on a subsequent date for further consideration.
