Case Details: Mag Filters and Equipments Pvt. Ltd. v. Commissioner of CGST Audit Gurugram (2025) 26 CENTAX 250 (P&H.)
Judiciary and Counsel Details
- Sanjeev Prakash Sharma & Sanjay Vashisth, JJ.
- Kavita Jha, Sr. Adv., Shri Shammi Kapoor, Vishal Kumar & Ajiteshwar Singh, Advs. for the Petitioner.
- Shri Sourabh Goel, Sr. Standing Counsel for the Respondent.
Facts of the Case
The petitioner challenged the initiation of audit proceedings under Section 65 of the CGST Act, 2017. The company had already undergone anti-evasion proceedings under Section 73 of the Act, pursuant to which a tax demand and interest were raised and deposited for the period 2017-18 to 2021-22. The petitioner argued that since the anti-evasion proceedings had concluded, the fresh initiation of an audit under Section 65 for the same period was unwarranted and amounted to harassment. The company was, however, ready to undergo an audit for the financial year 2022-23.
High Court Held
The High Court of Punjab & Haryana held that the audit is akin to a preliminary inquiry, and the Department should not be prevented from conducting a preliminary inquiry relating to the books of accounts of a registered person. The Commissioner can conduct the audit at such frequency and manner as may be prescribed. There is no embargo on conducting the audit of a registered person, and there is no prescribed time limit for the same. Audit may result in the detection of tax not paid or short paid or erroneously refunded or even benefit the concerned registered person. If the tax has been fraudulently evaded, the Department can initiate proceedings under Section 74 of the Act, independent of the proceedings under Section 73 of the Act.
