Spot Memos Issued By Audit Department Unenforceable, Since Earlier Proceedings On Same Issue Not Completed: Calcutta High Court

The Bench, consisting of Justices T. S. Sivagnanam and Hiranmay Bhattacharyya, observed that different wings of the same department had been issuing notices and summons to the assessee without taking any of the earlier proceedings to a logical end.

The appellant/ assessee Ideal Unique Realtors Private Limited filed an appeal before the Calcutta High Court challenging the jurisdiction of the Sr. Audit Officer in issuing a "spot memo" against the appellants.

The appellants submitted before the High Court that the Director General of Goods and Services Tax, DGGI, Kolkata had issued summons to the appellants for which the appellants had submitted their reply. Thereafter, the DGGI had issued two more notices on the same issue. The appellants added that in response to the summons, the appellants had appeared before the authority and had submitted the requisite documents. The appellants contended that in spite of the same, the revenue officials had issued spot memos to the appellants on the same issue.

The High Court ruled that if according to the revenue department there was an irregularity in the availment of credit by the appellants, then appropriate proceedings under the law should have been initiated and the matter should have been taken to a logical end. The Court added that the appellants could not be dealt with in such a fashion by the revenue department.

The Court added that the appellants were dealt with in an unfair manner since they were repeatedly issued notices and summons for the same issue, and the spot memos were also issued for the same purpose. The Court observed that different wings of the same department had been issuing notices and summons to the appellants without taking any of the earlier proceedings to a logical end.

The Court therefore held that the spot memos could not be enforced. The Court directed the concerned authority to consider the replies submitted by the appellants and take the previous proceedings initiated to a logical end.

The Court thus quashed the spot memos issued by the audit department.

Case Title: Ideal Unique Realtors Private Limited & Anr. versus Union of India & Ors.

Case Citation: 2022 LiveLaw (Cal) 153

Dated: 22.04.2022 (Calcutta High Court)

Counsel for the Appellants: Mr. Sandip Choraria, Mr. Rajarshi Chatterjee, Mr. Himangshu Kr. Ray

Counsel for the Respondent: Mr. Vipul Kundalia, Mr. Sukalpa Seal, Mr. Anurag Roy

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