In a significant case, the Delhi high court observed that no proceedings should be initiated by State Goods and Service Tax / Union Goods and Service Tax officers if the Central Goods and State Tax initiates investigation on the same Matter.
Petitioner, Amit Gupta carries on business in trading of urea in the name of his sole proprietorship concerns, namely, M/s Shyam Trading Company and M/s Garg Trading Company. Both the sole proprietorship concerns are registered as separate tax entities under the CGST Act.
When CGST Commissionerate, Delhi North (the Jurisdictional Commissionerate) conducted an investigation regarding the availability of ineligible Input Tax Credit (ITC) and issued summons to assessee and collected an amount of ₹50,12,000/-.
Thereafter, the officers of Directorate General of GST Intelligence, (DGGI) conducted a search in the petitioner’s principal places of business, his residence, and the godown due to diversion of agricultural grade urea for industrial use without paying any GST.
The assessee challenged the parallel investigation conducted by the both state and central officers in respect of the supply of goods received and made by the petitioner during the period of July, 2017 to March, 2022.
The Counsel for CGST Commissionerate, as well as DGGI argued that the investigations conducted by the two Commissionerate are separate investigations pursuant to the intelligence developed by them. Thus, there is no bar for them to conduct the said investigations as the substratum of their respective investigations is not identical.
Further, the counsel for the petitioner argued that DGGI has no jurisdiction to carry out any investigation in terms of Section 6(2)(b) of the Act as CGST Commissionerate had already initiated the proceedings first by issuing summons on 03.03.2022.
It was observed by the court that where a proper officer under the CGST Act had initiated proceedings on a subject matter, no proceedings would be initiated by a proper officer authorized under the SGST Act or UGST Act on the same subject matter.
Thus, the object of Section 6(2)(b) of the GST Act is to ensure that cross empowerment of officers of central tax and state tax do not result in the taxpayers being subjected to parallel proceedings.
However the court cannot accept the provisions of Section 6(2)(b) of the Act prescribing the transfer of investigations or proceedings as is contended on behalf of the petitioner. The object of Section 6(2)(b) of the Act is to avoid multiple proceedings by State Tax Officers and Central Tax Officers on the same subject matter.
After analyzing the facts and arguments of the both parties, the division bench of Vibhu Bakhru and Amit Mahajan observed that the subject matter of the two investigations conducted by the DGGI and CGST Commissionerate is slightly different.
Therefore the CGST Commissionerate agreed to the DGGI continuing the investigation from the stage.
Anjali Jha Manish, Priyadarshi Manish, Divya Rastogi and Anmol Arya, Advocates who appeared for petitioner. Ajit Kumar Kalia and Abhinav Kalia advocates appeared for CGST Commissionerate .
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