Audit Notice Is Valid Even if Issued After GST Cancellation; HC Denied Relief to Petitioner Who Fraudulently Availed ITC | HC

Case Details: Ashoka Fabricast (P.) Ltd. v. Union of India - [2024] 162 taxmann.com 719 (Rajasthan)

Judiciary and Counsel Details

• Pankaj Bhandari & Mrs Shubha Mehta, JJ.
• Akshay Sharma & Dheeraj Palia for the Petitioner.
• Ajay Shukla Sr. Standing Counsel, Raghav Sharma, Pushpendra Badgoti, Bharat Vyas, AAG & Ms Pratyushi Mehta for the Respondent.

Facts of the Case

The petitioner was served with a notice for conducting audit after cancellation of registration. It filed writ petition to challenge the audit notice issued after cancellation of GST registration & subsequent assessment order and submitted that Section 65 of CGST Act, 2017, applies only to registered persons. It was also contended that since the foundation of the proceedings was contrary to the mandate of the CGST Act, any assessment order passed in pursuance thereof, deserves to be quashed.

High Court Held

The Honorable High Court noted that Section 29(3) of CGST Act, 2017 provides that the cancellation of registration shall not affect the liability of the person to pay tax and other dues under this Act. Also, Section 65 of CGST Act, 2017 authorizes the Authority to undertake audit of any registered person for such period.

Therefore, the Court observed that the audit notice and subsequent assessment order for period when petitioner was GST registered were valid even if issued after cancellation of registration. Thus, the Court held that the petitioner was not entitled to relief after fraudulently availing ITC and cancelling registration.

List of Cases Reviewed

• Tvl. Raja Stores v. Assistant Commissioner (ST) MANU/TN/6752/2023 [Para 7] distinguished.