Section 140 of the CGST Act, 2017 – Transitional Credit –CERA Audit - The appellant challenged order dated 22nd November, 2021. The appellants /writ petitioners challenged the jurisdiction of the Sr. Audit Officer / SSCA-FAP-4 in issuing two communications both dated 22nd March, 2021 enclosing a memo called as “spot memo”, on the ground that there is no jurisdiction for the audit department to issue such a notice and placed reliance on the decision of the High Court of Bombay in Kiran Gems Private Limited – Vs. – Union of India reported in 2021 SCC OnLine Bom 98. This decision was relied on for the proposition that the Central Excise Revenue Audit (CERA) cannot conduct audit of records of a private entity. For the very same purpose, the department had issued summons and DGGI Kolkata, Zonal Unit is conducting investigations. The court observed that if, according to the respondents department, there is an irregularity in the availment of credit, then appropriate proceedings under the Act should be initiated and the matter should be taken to the logical end. It is not clear as to why different wings of the very same department have been issuing notices and summons to the appellants without taking any of the earlier proceedings to the logical end. There is no allegation against the appellants that they have not cooperated with the department in not responding to the summons issued earlier.

Held that:- The Hon’ble High Court allowed the writ appeal to the extent and quashed the spot memos and directed the DGGI to consider the reply submitted by the appellants dated 14th January, 2020 along with the earlier replies.