Simultaneous Investigations can’t be initiated by Central and State GST Authorities: Orissa HC quashes SCN [Read Order]

Investigations - Central and State GST Authorities - Orissa High Court - SCN - Taxscan

The Orissa High Court while quashing the Show Cause Notice held that the Simultaneous Investigations can not be initiated by Central and State GST Authorities.

The Petitioner, Sonam Berlia is engaged in trading of iron and scraps and has been assigned with GSTIN number.

The petitioner’s business premises was impounded by the Director General of Goods and Services Tax Intelligence (DGGSTI), Bhubaneswar Zonal Unit and a search was undertaken thereof under Section 67 of the Central Goods and Services Tax Act, 2017 (CGST Act). During the course of search records, documents were seized and summons were issued to the Petitioner under Section 70 of the CGST Act.

The allegation in the show cause notice issued on 23rd July, 2019 by the Additional CT and GST Officer, Sambalpur- I Circle was that tax dues has not been paid or short paid or refund has been released erroneously or input tax credit has been wrongly availed or utilized as provided under Section 74 of the Odisha Goods and Services Tax Act (OGST Act).

The Petitioner was asked to pay OGST, CGST, interest, penalty to the tune of Rs.3,78,68,262. According to the Petitioner she appeared before the State GST authority on 7th September, 2019 and submitted that since the Senior Intelligence Officer of the DGGSTI, Bhubaneswar has seized all the documents and issued summons pursuant to which the Petitioner was appearing there from time to time, the proceedings initiated by the State GST authority should be kept in abeyance till such time of proceedings before the DGGSTI concluded.

Mr. R. P. Kar, the counsel for the Petitioner has questioned the show cause notice issued by State GST authority on 23rd July, 2019, the orders dated 5th November, 2019 under Section 74 of the OGST Act as well as the consequential undated order under Section 74(9) of the OGST/CGST Act raising a demand for the month of April, 2019 under both the SGST and CGST Act for a total sum of Rs.3,74,74,957.

The Petitioner states that the Petitioner has already been cooperating and would continue to do so as far as the proceeding initiated by the DGGSTI.

The Authorities has itself set out in the counter affidavit the copy of the circular dated 5th October, 2018 issued by the CBEC which categorically states that if the officer of the Central tax authority initiates intelligence/enforcement action against a taxpayer, administratively assigned to a State tax authority, then the Central tax authority officers themselves have to further undertake the investigation and take the case to its logical conclusion and ‘would not transfer the said case to its state tax counterpart’.

The division bench headed by the Chief Justice Dr. S. Muralidhar and Justice B.P. Routray noted that the period of enquiry as far as Central tax authority is concerned is from July, 2017 to September, 2018 whereasState GST authority has issued a show cause notice specific for April, 2018 and, therefore, there is also an overlap of the periods.

The Court quashed the show cause notice dated 23rd July, 2019, the impugned order dated 5th November, 2019 including the order dated Nil all passed by State GST authority  and directs that till the conclusion of the proceedings initiated against the Petitioner by the DGGSTI, no coercive action be taken against the Petitioner by the State GST authority .

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