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

In this case, the petitioner is challenging the initiation of a new proceeding by a different wing of the Central Goods and Services Tax (CGST) department, despite the fact that an audit for the same financial years has already been completed by another wing of the department. The petitioner argues that once an audit is completed, the CGST department should be precluded from initiating any further proceedings or taking any additional action against him for the same financial period.

The petitioner’s counsel, however, is unable to point to any specific provision in the CGST Act that explicitly prohibits or bars the authority from initiating such proceedings. The absence of a clear statutory bar makes it difficult to argue that the new proceeding is unlawful solely on the basis that a previous audit was conducted.

To support their position, the petitioner’s advocate relies on a decision of this Court dated April 22, 2022, in the case of *Ideal Unique Realtors Private Limited & Ors. v. The Union of India & Ors.*, referenced as FMA 297 of 2022 with I.A. No. CAN 1. In that case, the court presumably dealt with a similar situation where the initiation of proceedings by a different authority within the same department after a prior audit was questioned.

The petitioner’s argument appears to rest on the principle of finality or res judicata, where once a matter has been conclusively settled by one authority, it should not be reopened by another, to prevent harassment and multiple proceedings on the same issue. However, in the absence of an explicit statutory prohibition, the argument may lack the legal foundation necessary to succeed unless supported by case law or legal principles that have been recognized by the courts.

The reliance on the *Ideal Unique Realtors* case suggests that the petitioner’s advocate is attempting to establish a precedent that could potentially apply to this case. The outcome will likely depend on whether the facts of the Ideal Unique Realtors case are sufficiently similar to this one, and whether the court in that case made a determination that could be interpreted as barring the initiation of new proceedings under similar circumstances.

In essence, the petitioner’s challenge hinges on the argument that the CGST department should not be allowed to pursue multiple proceedings against the same taxpayer for the same financial years, particularly after an audit has already been completed. However, without a clear statutory provision or a decisive judicial precedent that directly supports this argument, the challenge may face significant hurdles. The court’s decision in this case will likely turn on the interpretation of the CGST Act and the applicability of the *Ideal Unique Realtors* precedent to the present circumstances.

The challenge presented in this case revolves around the initiation of a new anti-evasion proceeding by a wing of the Central Goods and Services Tax (CGST) department against the petitioner. The petitioner argues that since the financial years in question have already undergone an audit by another wing of the same department, the CGST authorities should be barred from initiating further proceedings or taking any additional action against them. However, the petitioner fails to point to any specific provision within the CGST Act that explicitly prohibits or restricts the authorities from starting the impugned anti-evasion proceedings.

To support this argument, the petitioner’s learned advocate cites a decision by the Hon’ble Division Bench of the Court in the case of *Ideal Unique Realtors Private Limited & Ors. vs. The Union of India & Ors.*, specifically referring to the order dated 22nd April 2022 in FMA 297 of 2022 and I.A. No. CAN 1 of 2022. The advocate attempts to draw a parallel between the cited case and the present case, suggesting that the legal principles established in the former should apply to the latter. However, upon a detailed examination of the decision in the *Ideal Unique Realtors* case, the court finds that the facts and legal issues involved are clearly distinguishable and do not align with those in the present matter. Consequently, the precedent set by the cited case does not hold relevance here, either in terms of factual context or legal reasoning.

The court notes that the *Ideal Unique Realtors* case involved a situation where the audit department had repeatedly issued “spot memos,” which formed a significant part of the dispute. This is evident from a critical paragraph in the previous order, which clarifies the sequence of events in that case:

1. The intra-court appeal was filed against the order dated 22nd November 2021 in WPA No. 15695 of 2021. The appellants, who were the writ petitioners, challenged the jurisdiction of the 7th respondent, the Senior Audit Officer/SSCA-FAP-4, concerning the issuance of two communications dated 22nd March 2021. These communications included a document referred to as a “spot memo.” The appellants contested the legitimacy of the 7th respondent’s actions on the grounds of lack of jurisdiction, arguing that the audit department was not empowered to issue such notices. In support of their contention, the appellants relied on a decision by the Bombay High Court in the case of *Kiran Gems Private Limited vs. Union of India*. The reliance on this decision was to assert that the Central Excise Revenue Audit lacked the jurisdiction to proceed in the manner it did.

In conclusion, the court in the present case determined that the reliance on the *Ideal Unique Realtors* case was misplaced, as the circumstances and legal issues differ substantially. Moreover, the petitioner could not substantiate the claim that the CGST authorities are barred from initiating the contested anti-evasion proceeding based on the provisions of the Act. Consequently, the challenge raised by the petitioner does not stand on solid legal ground, and the anti-evasion proceeding initiated by the CGST department is not automatically precluded by the prior audit conducted by another wing of the department.

The petitioner in this case challenges the initiation of an anti-evasion proceeding by a wing of the CGST department on the grounds that an audit for the same financial years has already been completed by another department within the CGST. The petitioner argues that this second proceeding should be barred, although they are unable to cite any specific provision within the Act that explicitly prohibits or restricts the authority from initiating such a proceeding. The petitioner’s advocate supports their argument by referencing a decision from a previous case, *Ideal Unique Realtors Private Limited & Ors. vs. The Union of India & Ors.*, where the court issued an order on April 22, 2022. However, upon reviewing the decision, it is found to be distinguishable and not applicable to the present case, both factually and legally.

In the referenced case, the dispute involved the repeated issuance of spot memos by the audit department, which formed the basis of the challenge. The earlier case concerned an intra-Court appeal against an order dated November 22, 2021, in WPA No. 15695 of 2021. The appellants (or writ petitioners) challenged the jurisdiction of the 7th respondent, the Senior Audit Officer (SSCA-FAP-4), who issued two communications on March 22, 2021, including a “spot memo.” The appellants argued that the audit department lacked the jurisdiction to issue such notices. They cited a decision from the High Court of Bombay in *Kiran Gems Private Limited vs. Union of India*, which held that the Central Excise Revenue Audit (CERA) could not audit the records of a private entity.

Furthermore, the appellants highlighted that three earlier proceedings had already been initiated for the same reasons. These included actions by the CGST Department, Park Street Division, Kolkata, via a letter dated May 15, 2018, to which the appellants had replied on June 15, 2018, submitting the requested documents. Subsequently, the Director General of Goods and Services Tax (DGGI), Kolkata Zonal Unit, issued summons on July 11, 2018, to which the appellants again replied on July 24, 2018. Further notices were issued by the DGGI on November 15, 2019, and November 18, 2019, followed by another summons on January 2, 2020, all of which the appellants responded to by submitting the required documents.

Despite the appellants’ cooperation in submitting documents and appearing before the authority in response to these summonses, the repeated actions by the audit department, particularly the issuance of spot memos, were challenged as being beyond the department’s jurisdiction. The court in that case considered the repeated issuance of notices and spot memos to be a crucial factor, distinguishing it from the present case, where no such repeated actions have been alleged. Thus, the court found the earlier decision to be inapplicable to the current situation, where the petitioner is challenging a new proceeding on the grounds that an earlier audit had already been completed. The absence of any legal provision explicitly barring such a proceeding further weakens the petitioner’s challenge.

The petitioner challenges the initiation of anti-evasion proceedings by the Central Goods and Services Tax (CGST) department, arguing that since an audit of the same financial years had already been completed by another wing of the department, no new proceedings or actions should be initiated against them. However, the petitioner failed to cite any specific provision in the law that prohibits the authorities from initiating such proceedings.

In support of their argument, the petitioner’s advocate relied on a decision of the High Court from April 22, 2022, in the case of *Ideal Unique Realtors Private Limited & Ors. vs. The Union of India & Ors.* (FMA 297 of 2022 and I.A. No. CAN 1 of 2022). However, upon reviewing the details of that decision, the court found that the circumstances of the previous case were different from the current case, both in terms of facts and legal principles.

In the *Ideal Unique Realtors* case, the issue revolved around the jurisdiction of the audit department in issuing “spot memos” repeatedly without concluding the earlier proceedings. The appellants in that case had argued that the audit department lacked the authority to issue such notices, relying on a Bombay High Court decision in *Kiran Gems Private Limited vs. Union of India*. They contended that the Central Excise Revenue Audit (CERA) could not audit the records of a private entity. The appellants also pointed out that three earlier proceedings were initiated by various wings of the CGST department for the same purpose, and they had responded to all these notices by submitting the required documents.

Despite the appellants’ compliance, the audit department continued to issue spot memos, leading to their challenge in court. The Division Bench, in that case, questioned whether the appellants could be subjected to such repeated actions by the department without any of the proceedings being brought to a logical conclusion. The court emphasized that if the department found irregularities in the appellants’ availing of credit, appropriate proceedings under the law should be initiated and brought to a logical conclusion, after giving the appellants due opportunity to present their case.

In contrast, the present case does not involve the repeated issuance of spot memos or the failure to conclude previous proceedings. Instead, the challenge is based on the assertion that a previous audit by another wing of the CGST department precludes the initiation of new proceedings by a different wing. The court found this argument unconvincing, especially since the petitioner could not demonstrate any legal provision that would prohibit the new proceedings. As a result, the court did not find the decision in the *Ideal Unique Realtors* case applicable to the current situation.

In this legal matter, the petitioner challenges the initiation of anti-evasion proceedings by the CGST department, arguing that a prior audit covering the same financial years had already been completed by another department wing. The petitioner contends that since the audit was already done, no further action should be initiated against them by the CGST department. However, the petitioner could not point to any specific provision within the law that explicitly prohibits the CGST department from initiating such proceedings.

The petitioner’s legal representative referenced a previous decision by the Court in the case of *Ideal Unique Realtors Private Limited & Ors. vs. The Union of India & Ors.*, dated April 22, 2022. In that case, the Court dealt with issues related to repeated audits and spot memos issued by the audit department. The petitioners in that case challenged the jurisdiction of the audit department and questioned the issuance of notices, arguing that similar proceedings had already been conducted by other authorities, and hence no further action should be taken.

The Court in the *Ideal Unique Realtors* case noted that the audit department had issued multiple spot memos without bringing any of the previous proceedings to a logical conclusion. The Court highlighted that if there were irregularities in the availment of credit, the department should have initiated appropriate proceedings under the law, given due opportunity to the petitioners, and concluded the matter. The focus was on whether the audit department had jurisdiction and whether the procedures were properly followed.

However, the Court in the current case found that the circumstances were different. Unlike the *Ideal Unique Realtors* case, where the department did not conclude the proceedings or provide proper opportunities, in this case, the Court observed that the impugned notice issued by the CGST department resembled a show-cause notice. The Court determined that there was no lack of jurisdiction or procedural irregularity in the initiation of the anti-evasion proceedings against the petitioner. Additionally, there was no contravention of any statutory provisions.

Consequently, the Court was not inclined to interfere with the ongoing investigation and the initiation of the anti-evasion proceedings. The writ petition (WPA 20025 of 2022) filed by the petitioner was dismissed, allowing the investigation and proceedings to continue as per the law.

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