2024-VIL-1241-BOM
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SGST High Court Cases

GST – Section 65 of the CGST Act, 2017 – Audit of Cancelled dealer – Petitioner applied for cancellation of its registration on the ground that it had ceased to be liable to pay tax due to closure of business - The petitioner’s registration was cancelled on 1 April 2023 - Respondents issued notice dated 21 August 2024 under Section 65 to conduct an audit for the year 2020-21. The petitioner challenge the notice and the subsequent preliminary audit findings - Whether the provisions of Section 65 of the CGST/SGST Act dealing with audit would apply to a person who was registered under the Act for the period for which an audit is ordered but who ceases to be registered on the date the audit is ordered – HELD - the definition of "registered person" under Section 2(94) of the CGST/SGST Act does not exclude a person whose registration has been cancelled - the objective of Section 65 is to verify the correctness of the records, returns, and other documents maintained or furnished by the registered person, even if such registration is subsequently cancelled. Further, the cancellation of registration under Section 29(3) does not affect the liability of the person to pay tax and other dues, which can be determined before or after the date of cancellation - There is an obligation cast on a person in whose case of audit is conducted to comply with the directions of the tax authorities under Section 65(5) and these obligations are not affected even if registration is subsequently cancelled. This is made clear from the provisions of Section 29(3) of the Act. If the contention of the petitioner that because they are de-registered, they are not covered by the provisions of Section 65 is accepted, then it would lead to provisions of Section 29(3) dealing with discharge of obligation under the Act or the Rules redundant. It is a settled position that any interpretation that will make the Act's provisions redundant or nugatory cannot be accepted - Respectfully disagree with the views expressed by the ld. Single Judge of the Madras High Court in Tvl. Raja Stores case - the provisions of Section 65 would be applicable for conducting the audit of a financial year when a person was registered, even if such person ceases to be registered at the time of ordering the audit – the petition is dismissed
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