R. P. Buildcon (p.) Ltd VS Superintendent

This intra-Court appeal challenges the order dated September 19, 2022, in W.P.A. No. 20025 of 2022, filed by the appellants. The appellants initially sought a writ of certiorari to annul notices issued by the Central Goods and Services Tax (CGST) and Central Excise (CX) Headquarters, Anti-Evasion, Kolkata North Commissionerate. These notices pertain to the financial years 2017-2018 to 2019-2020, for which an audit was conducted under Section 65 of the CGST Act, 2017, by the Superintendent of CGST and CX, Circle-II, Kolkata Audit-I Commissionerate. The appellants also requested the quashing of similar notices issued by the Superintendent of CGST & CX, Range-III, Barrackpore Division, Kolkata North Commissionerate, related to the same financial years and tax periods audited under Section 65.

Furthermore, the appellants sought a writ of mandamus to declare that the scrutiny of returns under Section 61 of the CGST Act, 2017, is not permissible once an audit under Section 65 has already been conducted by the department for the same tax period. The appellants argued that once the audit process under Section 65 is completed, further scrutiny of returns for the same period under Section 61 should be barred.

In this intra-Court appeal, the appellants challenged an order dated September 19, 2022, in W.P.A. No. 20025 of 2022. The appellants had initially filed a writ petition seeking a writ of certiorari to quash certain notices issued by the CGST and CX Headquarters, Anti Evasion, Kolkata North Commissionerate. These notices pertained to the financial years 2017-2018 to 2019-2020, for which an audit under Section 65 of the CGST Act, 2017, had already been conducted by the Superintendent of CGST and CX, Circle-II, Kolkata Audit-I Commissionerate. The appellants sought to invalidate these notices and argued that once an audit under Section 65 had been conducted, further scrutiny of returns for the same period under Section 61 of the CGST Act, 2017, was not permissible.

The Single Bench dismissed the writ petition on the grounds that the proceedings were akin to a show cause notice, and thus, the appellants were not entitled to relief at this stage. Dissatisfied with this decision, the appellants brought the matter before the Court in an intra-Court appeal.

During the hearing, the Court closely examined the records and noted that three different wings of the same department were taking action against the appellants for the same financial periods (2017-2018, 2018-2019, and 2019-2020). The Audit Commissionerate was the first to act, issuing a notice under Section 65 of the CGST Act, 2017, on November 9, 2021. The appellants complied by providing the required details and responded to further intimations regarding the GST audit, which were dated January 5/6, 2022.

The appellants contested additional notices issued by the Superintendent of CGST & CX, Range-III, Barrackpore Division, Kolkata North Commissionerate, arguing that these notices should be quashed as they related to the same financial years already covered by the Section 65 audit. Furthermore, the appellants sought a writ of mandamus to declare that once an audit under Section 65 had been conducted, further scrutiny of returns under Section 61 for the same period was not legally permissible.

This appeal raises significant questions about the overlap of departmental actions and the legal permissibility of conducting multiple audits or scrutiny for the same tax period under the CGST Act, 2017. The Court’s decision in this matter will likely have important implications for how tax authorities can proceed in similar cases.

This intra-Court appeal arises from an order dated September 19, 2022, in W.P.A. No.20025 of 2022, where the appellants challenged the issuance of certain notices by the CGST and CX Headquarters, Anti Evasion, Kolkata North Commissionerate. These notices pertained to financial years 2017-2018, 2018-2019, and 2019-2020, during which an audit under Section 65 of the CGST Act, 2017, had already been conducted by the Superintendent of CGST and CX, Circle-II, Kolkata Audit-I Commissionerate.

The appellants initially sought a writ of certiorari to quash the notices, arguing that these notices were redundant since the audit for the relevant period had already been completed. Additionally, they requested a writ of mandamus, asserting that further scrutiny of returns under Section 61 of the CGST Act, 2017, was unwarranted and should be barred once an audit under Section 65 had been conducted for the same tax period.

The learned Single Bench dismissed the writ petition on the grounds that the notices in question were in the nature of show cause notices, which do not warrant interference at this stage. Dissatisfied with this ruling, the appellants brought the matter before the present Court.

During the appeal, the appellants’ counsel, Mr. Ankit Kanodia, argued that multiple wings of the same department—the Audit Commissionerate, the Anti Evasion wing, and the Range Office—were pursuing actions against the appellants for the same financial periods. He pointed out that the Audit Commissionerate had already initiated action with a notice dated November 9, 2021, under Section 65 of the CGST Act, 2017. The appellants responded to this notice by providing the requested details and complying with the intimation for a GST audit issued on January 5 and 6, 2022.

Mr. Kanodia further submitted that four issues were identified during the audit for the relevant period. The appellants accepted two of these issues, remitting the necessary tax and interest. However, they contested the remaining two issues and submitted their responses accordingly. Despite this, the matter was left unresolved as the department did not conclude the audit proceedings.

Complicating matters, the Anti Evasion wing and the Range Office also issued notices to the appellants concerning the same financial periods covered by the earlier audit. The appellants argued that these subsequent actions were unwarranted since the audit process under Section 65 had already commenced and was ongoing for the same periods.

In summary, the appellants contended that the department’s multiple wings were overlapping in their actions, leading to unnecessary duplication of proceedings. They sought relief from the Court to prevent further scrutiny and notices for periods already under audit. The appeal thus centers on whether the department’s actions were justified given the completion of an audit under Section 65 of the CGST Act, 2017, for the same financial years. The Court is now tasked with determining the validity of the appellants’ claims and whether the subsequent notices should be quashed.

This intra-Court appeal arises from an order dated 19th September 2022 in W.P.A. No. 20025 of 2022, filed by the appellants, challenging actions taken by the Central Goods and Services Tax (CGST) and Central Excise (CX) departments. The appellants sought a writ of certiorari to quash notices issued by the CGST and CX Headquarters, Anti Evasion, Kolkata North Commissionerate, related to financial years 2017-2018, 2018-2019, and 2019-2020. These notices were issued despite the fact that an audit under Section 65 of the CGST Act, 2017, had already been conducted by the Superintendent of CGST and CX, Circle – II, Kolkata Audit – I Commissionerate. The appellants also sought a writ of mandamus, declaring that once an audit under Section 65 of the CGST Act, 2017, has been conducted, scrutiny of returns under Section 61 for the same tax period should not be allowed.

The Single Bench dismissed the writ petition on the grounds that the proceedings in question were in the nature of show-cause notices, leading the appellants to file this intra-Court appeal. During the hearing, the Court, after reviewing the records, observed that three separate wings of the same department—the Audit Commissionerate, Anti Evasion, and Range Office—were pursuing actions against the appellants for the same financial years. The Audit Commissionerate had first issued a notice under Section 65 of the CGST Act on 9th November 2021, to which the appellants responded by providing the requested details and participating in the audit process.

The appellants’ advocate highlighted that the audit had raised four issues for the relevant periods. Of these, the appellants accepted two issues, paid the necessary tax and interest, and responded to the notice regarding the remaining two issues. However, despite the ongoing audit, the Anti Evasion wing and the Range Office also initiated proceedings for the same periods.

The learned standing counsel for the respondents argued that these actions by different wings occurred because there was no communication between them, and they were unaware of each other’s proceedings. The Court expressed concern over this lack of coordination, especially in an era where electronic communication is prevalent, and questioned why parallel proceedings were allowed to occur.

In conclusion, the Court opined that since audit proceedings under Section 65 had already commenced, these should be carried to their logical conclusion before any other actions are taken. The Court, therefore, directed that the proceedings initiated by the Anti Evasion and Range Office for the same periods should not continue further until the audit is completed. This decision aims to prevent overlapping and potentially conflicting actions by different wings of the CGST and CX departments, ensuring that the audit process is allowed to proceed without interference.

This intra-Court appeal arises from a legal dispute in which the appellants challenged an order dated September 19, 2022, issued in the case W.P.A. No. 20025 of 2022. The appellants had filed a writ petition seeking a writ of certiorari to quash notices issued by the CGST and CX Headquarters, Anti Evasion, Kolkata North Commissionerate. These notices pertained to audits conducted under Section 65 of the Central Goods and Services Tax (CGST) Act, 2017, for the financial years 2017-2018, 2018-2019, and 2019-2020. The appellants argued that these notices, issued by multiple wings of the same department, were invalid because an audit for the same period had already been conducted by the Superintendent of CGST and CX, Circle-II, Kolkata Audit-I Commissionerate. They also sought a writ of mandamus to declare that once an audit under Section 65 of the CGST Act had been conducted, no further scrutiny of returns for the same tax period could be done under Section 61 of the Act.

The learned Single Bench dismissed the writ petition, stating that the proceedings were merely in the nature of a show cause notice and therefore not subject to judicial review at this stage. Dissatisfied with this decision, the appellants brought the appeal before a higher bench.

The appellants’ counsel, Mr. Ankit Kanodia, argued that three different wings of the same department—the Audit Commissionerate, Anti Evasion wing, and Range Office—were taking action against the appellants for the same financial periods, creating a situation of parallel proceedings. The first action was initiated by the Audit Commissionerate, which issued a notice under Section 65 of the CGST Act on November 9, 2021. The appellants responded to this notice, provided the requested details, and addressed four specific issues raised by the audit. Of these issues, the appellants accepted two and paid the necessary tax and interest, while contesting the remaining two. However, before the audit could reach its conclusion, the Anti Evasion wing and the Range Office also issued notices to the appellants for the same periods, creating a situation where multiple proceedings were ongoing simultaneously.

The respondents’ counsel, Mr. K. K. Maiti, argued that the different wings of the department were unaware of each other’s actions, which led to the issuance of multiple notices. The court found it concerning that in an era of electronic communication, such lack of coordination within the same department could lead to parallel proceedings against the same party for the same period.

After hearing the arguments, the court concluded that since the audit proceedings under Section 65 had already commenced, it was appropriate for those proceedings to be brought to a logical conclusion before any further action could be taken by the other wings of the department. The court therefore allowed the appeal, setting aside the order of the Single Bench. The court directed the first and fourth respondents to issue a show cause notice to the appellants within six weeks, allowing them to submit their reply along with any supporting documents. The court further directed that the appellants be granted a personal hearing, either in person or virtually, following which a reasoned order must be issued within three weeks from the conclusion of the hearing.

Additionally, the court restrained the second and third respondents from proceeding further against the appellants for the same financial periods—2017-2018, 2018-2019, and 2019-2020—until the ongoing audit proceedings reached their conclusion. The court clarified that this direction applied only to the periods in question, and that the second and third respondents could still seek other material if needed for departmental assessment outside of these periods.

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