Action already taken u/s 73 of CGST Act 2017 no ground to restrain audit u/s 65 – HC

Action already taken u/s 73 of CGST Act, 2017 no ground to restrain Department from conducting audit under section 65 – High Court

In a recent judgment, Hon’ble High Court of Punjab and Haryana has held that action / proceedings taken under Section 73 of the CGST Act, 2017 would not be a ground to restrain the authorities from further conducting audit under section 65, as the audit may result in detection of tax not paid or short paid or erroneously refunded or it may be even otherwise to the benefit of the concerned registered person.

ABCAUS Case Law Citation:
4433 (2025) (02) abcaus.in HC

In the instant case, the Petitioner had filed a writ petition assailing the proceedings initiated by the GST Authorities under Section 65 of the CGST Act, 2017, (the Act) for conducting audit.

The Petitioner was a limited company registered under the Act. The case of the Petitioner was that the impugned notice demanded several documents which were already made available while conducting anti-evasion action and notices issued to the petitioner under Section 73 of the Act, whereafter tax demand towards the excess Input Tax Credit (ITC) for five years and interest was raised on the Petitioner which had already been deposited by the petitioner.

It was submitted that after the said proceedings u/s 73 had ended, a fresh proceedings of audit under Section 65 of the Act ought not have been initiated, and the same is a cause of great harassment to the petitioners, who was ready to get audit done for the subsequent years.

The Hon’ble High Court examined the provisions of Section 65 of the CGST Act of 2017 and observed that it is apparent that the Commissioner can conduct the audit at such frequency and in such manner as may be prescribed. There is no embargo on conducting audit of a registered person and there is also no time period prescribed therein.

The Hon’ble High Court opined that the audit is akin to a preliminary inquiry and the Department ought not to be prevented from conducting preliminary inquiry relating to the books of accounts of a registered person and no prejudice can be said to have been caused to the concerned registered person.

The Hon’ble High Court opined that the contention that the GST authorities had already taken action under Section 73 of the Act, would not be a ground to restrain the authorities from conducting audit, as the audit may result in detection of tax not paid or short paid or erroneously refunded or it may be even otherwise, to the benefit of the concerned registered person. In the event that it is found that the tax has been evaded fraudulently, the power is available to the Department to initiate proceedings under Section 74 of the Act, independent of the proceedings which may have been undertaken under Section 73 of the Act.

In view of the above, the Hon’ble High Court dismissed the writ petition.

Download Full Judgment Click Here >>

• CBDT extends due date of tax audit for FY 2025-26 to 21st October 2026
• Denying accumulation of u/s 11(2) merely on grounds of delay in filing Form No. 10 is unsustainable
• Engagement of 05 Young Professionals CAs at Central Registrar of Cooperative Society
• AO can’t take two different stands on immunity u/s 270AA(2) for a same transaction
• ITAT held 2000 gram jewellery reasonable in view of customary practices & CBDT Instruction