Amit Agency vs. Commissioner, CGST And Cx

Facts

The petitioner, Amit Agency, a partnership firm engaged in the business of cigarettes, filed a writ application challenging an audit report dated July 18, 2023, a show cause notice dated August 30, 2023, and an order dated April 22, 2024, all pertaining to the tax periods 2017-18, 2018-19, and 2019-20. The petitioner argued that the audit report was issued beyond the prescribed three-month limitation period under Section 65(4) of the Bihar Goods and Services Tax Act, 2017. Furthermore, the show cause notice and the subsequent order were allegedly issued without fulfilling mandatory pre-conditions, not uploaded on the web portal as required, and lacked digital signatures. The petitioner also challenged a corrigendum dated August 27, 2024, and a subsequent order dated October 18, 2024, for the period 2017-18.

Held

The Court, while acknowledging the petitioner's arguments regarding procedural lapses, including the timeliness of the audit report and the issuance of the show cause notice and order, ultimately held that it would not exercise its extraordinary writ jurisdiction under Article 226 of the Constitution to interfere with the order in original (Annexure P-6). The Court reasoned that the order in original is an appealable order and the petitioner should pursue their remedy before the appellate authority. The Court noted that the service of the writ application copy occurred within four months of the order in original, and Section 107 of the CGST Act provides a three-month limitation for filing an appeal, with a further one-month window for presentation. Therefore, the Court granted liberty to the petitioner to prefer an appeal within one month from the date of the judgment, and the appellate authority was directed to consider it on its own merits. The Court explicitly stated that all questions were left open to the parties and the observations made were only for the purpose of considering the pleas against the show cause notice, with the impugned order to be considered on its own merits. The Court found no fault in the issuance of the show cause notice under Section 74(1) of the CGST Act, opining that the sufficiency of reasons for the proper officer's belief is not for the court to judge in writ jurisdiction, provided there was some material to form the belief. The Court also found that the show cause notice did not suffer from non-application of mind or jurisdictional error.

Key Issues

1. Whether the audit report dated July 18, 2023, issued by respondent no. 4 for the periods 2017-18, 2018-19, and 2019-20, is liable to be set aside and quashed for being issued after the expiry of the three-month limitation period stipulated in Section 65(4) of the Bihar Goods and Services Tax Act, 2017, and consequently, whether the show cause notice and the order passed pursuant to it are vitiated. (Petitioner's contention: Yes, the audit report is time-barred, rendering subsequent proceedings invalid. Revenue's contention: Not explicitly recorded, but implicitly, the proceedings were validly initiated based on the audit findings.) 2. Whether the show cause notice dated August 30, 2023, issued by respondent no. 4 for the periods 2017-18, 2018-19, and 2019-20, is liable to be set aside and quashed for being issued on the basis of an audit report submitted after the expiry of the period contemplated in Section 65(4) of the Act, without fulfilling mandatory pre-conditions for invocation under Section 74 of the Act, and without being uploaded on the web portal contrary to instructions and without a digital signature as mandated by Rule 26(3) of the Rules. (Petitioner's contention: Yes, procedural irregularities and non-compliance with statutory requirements render the SCN invalid. Revenue's contention: Not explicitly recorded.) 3. Whether the order dated April 22, 2024, passed by respondent no. 2 for the periods 2017-18, 2018-19, and 2019-20, is liable to be set aside and quashed for being issued without fulfilling mandatory pre-conditions under Section 74 of the Act, based on an audit completed beyond the limitation period in Section 65(4) of the Act, and without uploading on the web portal contrary to Rule 142(5) and (6) of the CGST Rules, 2017, and relevant instructions, and without a digital signature as mandated by Rule 26(3) of the Rules. (Petitioner's contention: Yes, the order suffers from the same procedural infirmities as the SCN. Revenue's contention: Not explicitly recorded.) 4. Whether the corrigendum dated August 27, 2024, issued by respondent no. 2, imposing penalty in exercise of powers under Section 161 of the Act, is wholly without authority of law and liable to be set aside and quashed. (Petitioner's contention: Yes, the corrigendum is beyond the statutory powers. Revenue's contention: Not explicitly recorded.) 5. Whether the separate order dated October 18, 2024, passed by respondent no. 2 under Section 74 of the Act for the period 2017-18, being a second order, is impermissible under the scheme of the Act and without giving reasons, thus liable to be set aside and quashed. (Petitioner's contention: Yes, a second order is impermissible and lacks reasoning. Revenue's contention: Not explicitly recorded.)