Court emphasizes the importance of following statutory processes and allows the petitioner to raise all objections before the Adjudicating Authority under the CGST Act.
In a significant judgment, the Delhi High Court has dismissed a writ petition filed by Dhruv Medicos Pvt Ltd, challenging the audit proceedings and a Demand-cum-Show Cause Notice issued under the Central Goods and Services Tax Act, 2017 (CGST Act). The bench, comprising Justices Anil Kshetarpal and Bharat Parashar, ruled that the petitioner should address all objections to the Adjudicating Authority as part of the statutory process.
Dhruv Medicos Pvt Ltd had filed a writ petition against the Deputy Commissioner, Central GST Circle 5, Audit-I, Delhi, contesting the audit report and the subsequent show cause notice issued under Section 74 of the CGST Act. The petitioner argued that their reply to the audit objections was inadequately considered and that the payment of Rs.40,10,153/- was made under coercion during the audit process.
The court, however, declined to interfere at this pre-adjudication stage, emphasizing that statutory adjudicatory proceedings have already been initiated and that all objections, including those concerning the audit process, alleged coercion, and computation of liability, should be raised before the Adjudicating Authority. The bench highlighted that the issuance of a show cause notice does not determine liability, and the petitioner has the opportunity to present their objections during the adjudicatory process.
The court noted that while the statutory requirement under Rule 101(4) of the Central Goods and Services Tax Rules, 2017 mandates consideration of the petitioner's reply, whether it was adequately considered is a matter for the adjudicating proceedings. The court also addressed issues regarding contempt proceedings related to an interim order but decided to close those proceedings based on the explanation provided by the respondent officer.
In conclusion, the court disposed of the writ petition, allowing Dhruv Medicos Pvt Ltd to raise all their objections before the Adjudicating Authority, who will consider them independently and in accordance with the law. The judgment underscores the importance of following statutory processes and the distinction between audit and adjudicatory proceedings under the CGST Act.
Bottom Line :
GST - Writ petition challenging audit report and show cause notice under Section 74 of the CGST Act at pre-adjudication stage - High Court declined interference - Assessee permitted to raise all objections before Adjudicating Authority including non-consideration of audit reply, limitation, coercion in DRC-03 deposit, appropriation and computation of liability.
Statutory provision(s): Central Goods and Services Tax Act, 2017 Section 74, Central Goods and Services Tax Rules, 2017 Rule 101(4).
