GST Audit Permissible for Period When Registration Was Active, Even If Cancelled Later. "Registered or Deregistered, Compliance Obligation Under SGST Act Persists."

Case Note & Summary

Acts and Sections Discussed:

Maharashtra Goods and Services Tax Act, 2017 (SGST Act) Section 2(13) - Definition of "audit." Section 2(94) - Definition of "registered person." Section 29(3) - Liability post-cancellation of registration. Section 65 - Audit by tax authorities. Goods and Services Tax Rules, 2017 (GST Rules) Rule 101 - Provisions governing audit. Para-Wise Analysis with Headings 1. Introduction to the Petition [Para 1-2] The petitioner challenged notices issued under Section 65 of the SGST Act for an audit for the FY 2020-21. Primary contention: Audit provisions are inapplicable post-registration cancellation. 2. Factual Background [Para 3-6] Registration issued on 2 March 2019 and canceled on 2 May 2023 upon closure of business. Audit initiated for FY 2020-21. Petitioner relied on Tvl. Raja Stores v. AC (ST) (Madras High Court) to argue against post-cancellation audits. 3. Issues for Consideration [Para 7-9] Key Issue: Whether Section 65 audits apply to persons whose registration has been canceled. 4. Analysis of Relevant Provisions [Para 10-15] Defined "registered person" under Section 2(94) to include past registrants. An audit examines historical records, not concurrent compliance, making it relevant even post-deregistration. 5. Legislative Intent of Section 65 [Para 16-19] Rule 101 emphasizes audit applicability to financial years where registration was active. Section 65 audits are preparatory steps for recovery under Sections 73/74. 6. Submissions and Court’s Observations [Para 20-23] Petitioner’s reliance on Tvl. Raja Stores was found misplaced. The Court held that liability persists under Section 29(3), even post-cancellation. 7. Conclusion and Decision [Para 24-31] Section 65 audits remain applicable for periods when registration was active. Petition dismissed, affirming the validity of the audit notice and preliminary findings. Ratio Decidendi Definition of "Registered Person": Includes individuals registered during the period under audit, regardless of subsequent deregistration. Continuing Obligations: Cancellation of registration does not absolve compliance for earlier periods under Section 29(3). Purpose of Audit: Section 65 enables verification of historical compliance, even post-deregistration. Subjects:

GST Compliance and AuditsSGST Act, GST Audit, Registration Cancellation, Compliance Obligations, Tax Liability, Rule 101.