Facts of the Case:

In this case, the petitioner challenged proceedings initiated for the tax period 2018–2019 under the GST enactments. The challenges was made against Audit Report issued under Section 65(6) and the consequential Show Cause Notice issued under Section 74.  An interim order was passed by the High Court , directing the petitioner to participate in the proceedings and restraining the respondents from passing any final assessment order. Pursuant to the interim directions, the petitioner submitted replies and documents, and the second respondent examined the matter and recorded conclusions and recommendations. The said conclusions noted that the audit objections did not warrant confirmation of demand, as the issues were interpretational and no suppression, misstatement, or intent to evade tax was established.

Despite the above findings, no final order had been passed due to the subsisting interim orders of the High Court. The matter thereafter came up for final disposal of both writ petitions.

Issue:

Whether the audit report issued under Section 65(6) and the show cause notice issued under Section 74 could continue without being brought to a logical conclusion, despite the respondent authority’s own findings negating the proposed demands.

Held that:

The Court took note of the conclusions recorded by the second respondent on 08.12.2025, wherein it was expressly observed that the audit defects did not warrant confirmation of demand and that no evidence of suppression, misstatement, or intent to evade tax was established. The Court further observed that if the authorities intended to proceed further based on the personal statement dated 08.12.2025, such proceedings must culminate in a reasoned order on merits after granting the petitioner an opportunity of personal hearing.

The Court held that since no final orders had been passed pursuant to the audit report and the show cause notice due to the operation of interim orders, it was necessary for the respondent authority to conclude the proceedings in a lawful and time-bound manner.

Case Name: Reckitt Benckiser (India) Private Limited Versus State of Tamil Nadu through Its Principal Commissioner of GST, The Assistant Commissioner (ST), The State Tax Officer, Tamil Nadu. dated 22.01.2026

To read the complete judgement 2026 Taxo.online 239