Navayuga Engineering Company Limited Vs Joint Commissioner of Commercial Taxes
Date: November 17, 2025
Subject Matter
Revisional Power u/s 108 Cannot Precede Assessment Proceedings
Summary
Summary of Facts and Dispute:
Audit Conclusion: The tax authorities conducted an audit for the petitioner, which resulted in a Revised Audit Observation dated 17.11.2023. The petitioner submitted a reply, culminating in a final Audit Report (Form GST ADT-02) dated 15.12.2023.
Revisional Proceedings Invoked: The Respondent (Joint Commissioner) initiated Revisional Proceedings by issuing a notice dated 19.10.2024, leading to the Impugned Order in Revision dated 14.05.2025 (Annexure-A).
Core Contention: The petitioner argued that the Revisional Authority acted illegally because no assessment proceedings (under Section 73 or Section 74) had been initiated following the Audit Report. The revision power cannot be used to overrule a mere Audit Report or its findings.
The learned AGA for the respondent confirmed that proceedings under Section 73 or Section 74 had indeed not been initiated as of the date of the hearing.
Ruling:
The High Court allowed the petition, quashing the impugned Revisional Order.
Mandatory Statutory Process: The Court relied on Section 65(7) of the KGST Act, which clearly mandates that if an audit detects tax anomalies, the Proper Officer "can initiate action under Section 73 or Section 74 of the Act."
Precondition for Revision: By initiating revisional proceedings under Section 108 without first exhausting the mandatory statutory mechanism of assessment (Section 73/74), the Revisional Authority acted in violation of Section 65(7) and without jurisdiction. The revision power is typically invoked against an appealable order, or an order passed under the Act, not against an Audit Report itself.
Order Quashed: The impugned revision order (dated 14.05.2025) is declared illegal, arbitrary, and without authority of law.
Directions:
The impugned Order in Revision dated 14.05.2025 is quashed.
Liberty is reserved in favour of the respondent to initiate proceedings against the petitioner in accordance with law (i.e., under Section 73 or Section 74) subject to all just exceptions and limitations.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
In this petition, petitioner seeks the following reliefs:
“(a) To issue order(s), directions, writ(s) in the nature of Certiorari or any other writ quashing the Impugned Order in Revision bearing No. JCCT(ADMN)/DGSTO-6/GST/SMR-03/2025-26 dated 14.05.2025 passed by the Respondent is enclosed at Annexure-A as being without jurisdiction;
(b) To issue order(s), directions, writ(s) in the nature of mandamus or any other writ holding that the provisions of Section 15(2) of the CGST Act to determine the value of supply is inapplicable to the facts and of the present case;
(c) To issue order(s), directions, writ(s) in the nature of mandamus holding that invocation of revisional powers by the Respondent to pass the Impugned Order under Section 108(1) f the CGST Act against an Audit Report is incorrect and without Authority of law;
(d) To issue order(s), directions, writ(s) in the nature of certiorari or any other writ holding that the interest Section 50 of the CGST/SGST Act, 2017 and penalty under Section 73(9) of CGST/SGST Act, 2017 is not leviable;
(e) To issue order(s), directions, writ(s) or any other relief as this Hon’ble Court deems it fit and proper in the facts and circumstance of the case in the interest of justice;”
2. Heard learned Senior Counsel for the petitioner and learned counsel for the respondent and perused the material on record.
3. In addition to reiterating the various contentions urged in the memorandum of petition and referring to the material on record, learned Senior Counsel for the petitioner invited my attention to the Revised Audit Observation dated 17.11.2023, to which petitioner submitted a reply dated 24.11.2023, which culminated in an Audit Report dated 15.12.2023 in Form GST No. CTO/Audit-6.1/DGSTO-6/23-24 dated 15.12.2023 in Form GST ADT-02. It is submitted that after having issued the aforesaid Audit Report dated 15.12.2023 in favour of the petitioner, the respondent was not entitled to initiate Revision Proceedings under Section 108 of the KGST Act by issuing notice dated 19.10.2024 especially when no proceedings under Section 73 or Section 74 of the KGST Act, was initiated by the respondent prior to initiating the revision proceedings or subsequently and as such, the impugned revision proceedings including the impugned order passed by the Revisional Authority deserves to be quashed.
4. Per contra, learned AGA for the respondents on instructions submits that there is no merit in the petition and that the same is liable to be dismissed. He however would not dispute the fact that proceedings under Section 73 or Section 74 of the KGST Act had not been initiated by the respondent as on date and liberty may be reserved in favour of the respondent to initiate such proceedings as permissible in law.
5. The aforesaid facts and circumstances clearly indicate that as on the date of initiating revisional proceedings by issuance of the revision notice dated 19.10.2024, respondent had not initiated proceedings under Section 73 or Section 74 of the KGST Act. In this context, it is relevant to extract Section 65(7) of the KGST Act, which reads as under:
“Section 65(7) of the Kerala Goods and Services Tax (KGST) Act, 2017, states that if an audit conducted by the tax authorities detects any instances of unpaid or short-paid tax, erroneously refunded tax, or input tax credit wrongly availed or utilized, the proper officer can initiate action under Section 73 or Section 74 of the Act.”
6. A plain reading of the aforesaid provision will clearly indicate that upon coming to know about issuance of the Audit Report, it is incumbent upon the respondent to initiate proceedings / action under Section 73 or Section 74 of the KGST Act and without doing so, it is impermissible in law for the respondent to initiate revisional proceedings, which is contrary not only to the aforesaid provision but also the other material on record especially having regard to the fact that no proceedings have been initiated under Section 73 or Section 74 of the KGST Act even till today.
7. Under these circumstances, I am of the considered opinion that the impugned proceedings including the impugned order are illegal, arbitrary and without authority of law and the same deserves to be quashed.
8. In the result, I pass the following:
ORDER
(i) The petition is hereby allowed.
(ii) The impugned order in Revision at Annexure – A dated 14.05.2025 passed by the respondent is hereby quashed.
(iii) Liberty is however reserved in favour of the respondent to initiate proceedings against the petitioner in accordance with law subject to all just exceptions and limitations as permissible in law.