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2024 (2) TMI 130 - MADRAS HIGH COURTFraud, wilful-misstatement or suppression of fact in audit report or not - intimation in Form GST DRC-01A was not issued to the petitioner - violation of principles of natural justice. Principal contention of the petitioner was that the audit report did not contain findings of fraud, wilful-misstatement or suppression of facts - HELD THAT:- Section 65 of the CGST Act deals with audit by a tax authority and sub-section (7) thereof is particularly relevant for this case - The text of sub-section (7) indicates that the audit conducted under sub-section (1) thereof should result in the detection of tax not paid or short paid or erroneously refunded, or that Input Tax Credit (ITC) was wrongly availed or utilised. On examining the audit report, undoubtedly, it indicates that tax was not paid or short paid or that ITC was wrongly availed or utilised. Thus, the obligation imposed by statute with regard to the content of the audit report appears to be satisfied. Learned counsel for the petitioner contended that the audit report should also contain findings of fraud or wilful-misstatement or suppression of facts. There is nothing in the language of Section 65 to indicate that the audit report should contain such findings. On the contrary, subject to the audit report disclosing the aforesaid, subsection (7) of Section 65 prescribes that the proper officer may initiate action under Section 73 or 74. Thus, the relevant provision indicates that the proper officer has the option. The second ground canvassed by the petitioner was that intimation in Form GST DRC-01A was not issued. Although Rule 142(1) of the CGST Rules was amended, learned counsel submits that such amendment is prospective. The show cause notice in Form GST DRC-01A was issued on 14.12.2023, which is subsequent to the date of amendment. Therefore, even if the amendment is prospective, the amendment would apply with regard to the impugned show cause notice. The last objection of the petitioner to the show cause notice was on the basis that expenses were taken from the consolidated balance sheet. This contention does not justify interference with the show cause notice under Article 226 of the Constitution of India. Thus, no case is made out to interfere with the impugned show cause notice - petition dismissed.
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