The Hon’ble Calcutta High Court in the case of M/s. R.P. Buildcon Private Limited & Anr v. The Superintendent, CGST & CX Circle-II Group-10 & Ors. [WPA 20025 OF 2022] dated 30.09.2022 restricted two wings of the same Department from initiating proceedings for the same time period till the proceedings before the Audit Commissioner comes to a logical end.
The Superintendent, CGST & CX (herein referred to as “the Respondent“) issued notices pertaining to the financial years 2017–2018 to 2019–2020. Pursuant to the notices, an audit under Section 65 of the Central Goods and Services Tax Act, 2017 (herein referred to as the “CGST Act”) was conducted.
Meanwhile, the Anti Evasion Wing and the Range Office also conducted scrutiny of returns for the same tax period in accordance with Section 61 of the CGST Act.
M/s. R.P. Buildcon Private Limited & Anr. (herein referred to as “the Appellant“) filed a Writ Petition to quash the show cause notice (herein referred to as “SCN“) issued by the Respondent, arguing that once an audit has been conducted under Section 65 of the CGST Act, the scrutiny of returns under Section 61 of the CGST Act cannot be done for the same tax period.
The Writ Petition was dismissed by the learned Single Bench by Order dated 19.09.2022 (herein referred to as “the Impugned Order”) on the grounds that the said proceedings are in the form of a show-cause notice.
Therefore, being aggrieved by the Impugned Order, the Appellant filed an appeal before the Calcutta High Court (herein referred to as “the High Court”).
ISSUE BEFORE THE HIGH COURT
Whether or not parallel proceedings for the same tax period by different wings of the same Department can be conducted?
CONTENTION OF THE PARTIES
The Appellant claimed that out of the four issues that the audit identified for the said period, two were accepted by the Appellant, and the necessary tax and interest were remitted; for the remaining two issues the Appellant responded to the SCN, but the matter has not reached to the logical end.
The Appellant submitted that in the meantime, the other two wings i.e. Anti- Evasion Wing and the Range Office have also initiated their proceedings against the Appellant for the same period for which audit proceedings were already commenced under Section 65 of the CGST Act.
The Respondent argued that the three wings of the Department initiated the proceeding as the Range Office and the Anti- Evasion Wing were not aware of the proceedings initiated by the Audit Commissionerate.
DECISION AND FINDINGS
The High Court held that as the audit proceedings under Section 65 of the Act have already commenced, it is appropriate that the proceeding should be taken to the logical end by the Audit Commissionerate itself. Therefore, the proceedings commenced by the Anti- Evasion Wing and Range office shall not proceed further.
The High Court set aside the Impugned Order and directed the Respondents to issue SCN to the Appellant within six weeks of receiving a server copy of this judgement. The High Court directed the Respondent to afford the Appellant a reasonable chance to submit its response along with supporting documents.
The High Court in this case has restricted the parallel proceedings against the Appellant that were initiated by different wings of the same Departments for the same tax period. Earlier the High Court held the same in the case of Raj Metal Industries & Anr. v. Union of India & Ors. [WPA 129 of 2021].
The communication gap between the different Wings of the same Department in this Modern time of technology is an issue to be resolved with an immediate effect in order to save time and resources of the Department.
-Team AMLEGALS assisted by Ms. Pratishtha Vaidya (Intern)
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