The Calcutta High Court in the case of ABDUR ROUF KHAN v. SUPERIENTENDENT OF CENTRAL TAX & ORS. Vide WPA 3987 of 2025 dated 09.07.2025, held that impugned audit under Section 65 of the CGST Act by the CGST authorities was not legally sustainable for the tax periods already adjudicated by the State GST authorities under Section 73 of the CGST Act, and that such a parallel initiation of proceedings violates Section 6(2)(b) of the CGST Act, 2017.

Facts of the Case: In this case, the petitioners challenged audit observations dated 13th January 2025 issued by the Central GST authorities, arguing that the same subject matter had already been adjudicated by the State GST authorities through orders passed under Section 73 of the CGST/WBGST Act for the financial years 2017-18, 2018-19, and 2019-20. The petitioner submitted that the State had completed proceedings on the claim of exempted/nil-rated supply and had passed three separate orders accordingly.

Despite this, the Central GST authorities initiated a fresh audit covering the period from 2017-18 to 2022-23, relying on audit observations for the years 2018-19 to 2021-22, culminating in issuance of a show-cause notice dated 19.12.2023 and an order under Section 73 dated 25.04.2024. The petitioner contended that such reinitiation is impermissible in light of Section 6(2)(b) of the CGST Act, which bars initiation of proceedings by one authority when proceedings on the same subject matter have already been initiated by another proper officer.

The respondents contended that the audit was conducted under Section 65, and since the final outcome under Section 65(7) had not yet materialized in the current round, the proceedings were still open and within statutory framework. They also argued the petitioner’s claim was premature and that the audit was lawfully sanctioned.

Issue: Whether the Central GST authorities were justified in initiating a fresh audit under Section 65 of the CGST Act for the financial years 2018-19 to 2021-22, when the same periods were already subject to adjudication by the State authorities under Section 73, thereby triggering the bar under Section 6(2)(b) of the CGST Act.

Held that: The High Court held that Section 6(2)(b) of the CGST Act bars the initiation of proceedings by one authority on a subject matter already taken up by another proper officer. In the present case, the State authorities had already passed orders under Section 73 for the tax periods 2017-18, 2018-19, and 2019-20, covering issues of exempted/nil-rated supply.

The show-cause and order passed by the Central authorities for 2018-19 to 2021-22 were also based on earlier audit observations, and Section 65(7) proceedings had culminated in a notice under Section 73. Therefore, a fresh audit for the same periods (2018-19 to 2021-22) was impermissible under the Act.

However, the audit for periods not previously covered, namely 2017-18 and 2022-23, may continue.

Accordingly, the Court quashed the impugned audit proceedings for the overlapping periods, and the writ petition was allowed to that extent. The Court clarified that the representation dated 24th January 2025 made by the petitioner may be considered, and the authorities are permitted to proceed with audit only for 2017-18 and 2022-23.

To read the complete judgment 2025 Taxo.online 1613