GST Authorities are empowered to issue notice for audit to be conducted for pre-GST period i.e. under Central Excise or Service Tax law.
In CGST Act, 2017 section 174 is the repeal and saving provisions. Sub-section (1) of Section 174 repeals the provisions of the various statute as mentioned therein. Sub-Section (2) of Section 174 stipulates that, notwithstanding the repeal of the Acts mentioned in Sub-Section (1) of Section 174 and the amendment of the Finance Act, 1994 to the extent mentioned in sub-Section (1) of Section 174 or Section 173, it shall not affect any pending investigation, enquiry, verification or other legal proceedings and that, such proceedings may be instituted, continued or enforced as if such Act had not been repealed.
In the matter of the High Court of Kolkata, held that the Provisions of Chapter V of the Finance Act, 1994 stands omitted by Section 173 of the CGST Act 2017 save as otherwise provided under the GST Act. Therefore, if any provision of the Act of 2017 allows the applicability of the Chapter V of the Finance Act, 1994, then notwithstanding the omission of the Chapter V of the Finance Act, 1994 under Section 173, the same continues to apply.
On prima facie, reading of Section 173 and 174 of the CGST Act 2017, it appears that an enquiry or an investigation or even a legal proceeding under the Pre-GST Law is permissible even after the enactment of CGST Act 2017. The Authorities are proposing to undertake an audit for the period when the Act of 1994 was applicable. Hence the Authorities are entitled to do so.
Similar view is also taken in the matter of:
- M/s Suresh Kumar Singhal v. UOI [2019 (365) E.L.T. 780 (Rajasthan)]
- M/s Laxmi Narayan Sahu v. UOI [2018 (19) G.S.T.L. 626 (Guwahati)]