Case Note & Summary
The petitioner, Victoria Properties Private Limited, was engaged in rental and leasing services of commercial properties. It was issued a GST registration certificate on 2 March 2019 under the CGST Act. On 27 March 2023, the petitioner applied for cancellation of its registration on the ground of closure of business. The respondents passed an order on 2 May 2023 cancelling the registration with effect from 1 April 2023, explicitly stating that no amount was payable by the petitioner. Subsequently, on 6 November 2023, the respondents issued a notice for conducting an audit for the period April 2021 to April 2022 (financial year 2020-21). The petitioner objected relying on the Madras High Court decision in Tvl. Raja Stores v. Assistant Commissioner (ST), but the respondents rejected the objection and issued another audit notice on 21 August 2024, followed by preliminary audit findings on 11 October 2024. The petitioner filed a writ petition under Article 226 of the Constitution challenging the audit notice and preliminary findings. The court framed the legal issue whether an audit under Section 65 of the MGST Act can be conducted against a person whose registration has been cancelled. The petitioner argued that Section 65 applies only to a registered person, and since the registration was cancelled, the audit notice was without jurisdiction. The respondents contended that the audit was for a period when the registration was active. The court held that Section 65 of the MGST Act uses the phrase 'registered person' and does not extend to persons whose registration has been cancelled. The cancellation order was passed before the audit notice, and the petitioner was not a registered person at the time of the notice. The court also noted that Section 29(3) was not applicable as no tax liability was determined. Relying on the Madras High Court decision in Tvl. Raja Stores, the court quashed the audit notice dated 21 August 2024 and the preliminary audit findings dated 11 October 2024. The petition was allowed with no order as to costs.
Headnote
A) Goods and Services Tax - Audit under Section 65 - Applicability to Cancelled Registrant - Section 65 of the Maharashtra Goods and Services Tax Act, 2017 - The court considered whether an audit under Section 65 can be initiated against a person whose GST registration has been cancelled. The petitioner's registration was cancelled on 1 April 2023, and the audit notice was for the period 2020-21. The court held that Section 65 applies only to a 'registered person' and not to a person whose registration has been cancelled. Since the petitioner was not a registered person at the time of the audit notice, the notice was without jurisdiction. (Paras 1-10) B) Goods and Services Tax - Cancellation of Registration - Effect on Audit - Section 29(3) of the Maharashtra Goods and Services Tax Act, 2017 - The court examined whether Section 29(3) could be invoked to conduct an audit after cancellation. It held that Section 29(3) applies only when tax liability is determined before or after cancellation. In this case, the cancellation order stated that no amount was payable by the petitioner. Therefore, Section 29(3) was not applicable. (Paras 7-10) C) Goods and Services Tax - Precedent - Tvl. Raja Stores v. Assistant Commissioner (ST) - The court relied on the Madras High Court decision in Tvl. Raja Stores v. Assistant Commissioner (ST), (2023) 153 taxmann.com 657 (Madras), which held that an audit under Section 65 cannot be conducted after cancellation of registration. The court agreed with the reasoning and applied it to the present case. (Paras 5, 10)
Issue of Consideration
Whether an audit under Section 65 of the Maharashtra Goods and Services Tax Act, 2017 can be conducted against a person whose GST registration has been cancelled.
Final Decision
The court allowed the petition, quashing the audit notice dated 21 August 2024 and the preliminary audit findings dated 11 October 2024. No order as to costs.
Law Points
- Section 65 of MGST Act applies only to registered persons
- audit cannot be conducted after cancellation of registration
- Section 29(3) of MGST Act not applicable when no tax due determined
