2021 (2) TMI 1324 - HC - GST

Court upholds jurisdiction of tax authority, dismisses challenge to summons under CGST Act.

The court rejected the writ application challenging the validity of summons issued under Section 70 of the CGST Act, 2017 by the DGGSTI, Zonal Unit, ... Jurisdiction - parallel proceedings - with respect to one subject matter two authorities are conducting the inquiry - power to summon any person under Section 70 of the CGST Act lies with a “proper officer” or not - stance of the respondents is that the impugned summons issued by the DGGSTI has no relevance or any bearing with the writ-application filed by the writ-applicant before the High Court of Delhi. Whether we should interfere at the stage of issue of summons under Section 70 of the CGST Act, 2017? - HELD THAT:- The judgment of the Supreme Court in the case of COMMISSIONER OF CUSTOMS, CALCUTTA VERSUS MM EXPORTS [2007 (3) TMI 265 - SUPREME COURT], takes the view that the High Courts should not interfere at the summons stage except in exceptional cases, the reason being that the department has not decided and taken a firm opinion whether or not to issue a show-cause notice. One more decision of the Supreme Court is in the case of Union of India vs. Rajnish Kumar, Tuli, [2010 (1) TMI 1248 - SUPREME COURT]. In the said case, the appeal arose out of the order passed by the Punjab and Haryana High Court, directing the concerned officers of the Directorate of Revenue Intelligence to examine and record the evidence of the respondent therein at their office at Ludhiana - A case was registered by the Ahmedabad Zonal Unit, DRI, on the allegation of misuse of the advance licence scheme and summons were issued under Section 108 of the Customs Act, 1962. The Supreme Court took note of the decision in the case of Dukhishiyam Benupani, Asstt. Director, Enforcement Directorate (FERA) vs. Arun Kumar Bajoria, [1997 (11) TMI 428 - SUPREME COURT], and held that the learned Single Judge of the Punjab and Haryana High Court could be said to have passed the order without properly appreciating the decision of the Supreme Court in the case of Arun Kumar Bajoria. This writ-application need not be entertained - application dismissed. Issues Involved:1. Legality and validity of summons issued under Section 70 of the CGST Act, 2017.2. Jurisdiction of the Directorate General of Goods and Services Tax Intelligence (DGGSTI), Zonal Unit, Ahmedabad.3. Whether multiple agencies can conduct parallel investigations on the same subject matter.4. Conditions for availing Input Tax Credit (ITC) under the CGST Act, 2017.5. Maintainability of writ petitions challenging summons.Detailed Analysis:1. Legality and Validity of Summons Issued Under Section 70 of the CGST Act, 2017:The court noted that the writ applicant challenged the summons issued by the DGGSTI, Zonal Unit, Ahmedabad, under Section 70 of the CGST Act, 2017. The applicant argued that the summons lacked jurisdiction and were invalid. The court emphasized that Section 70 grants the 'proper officer' the power to summon any person to give evidence or produce documents and that such inquiries are deemed 'judicial proceedings' under Sections 193 and 228 of the Indian Penal Code. The court reiterated that even though the inquiry is not a criminal proceeding, it is a judicial proceeding, and the person summoned must not give false evidence or insult the officer.2. Jurisdiction of the Directorate General of Goods and Services Tax Intelligence (DGGSTI), Zonal Unit, Ahmedabad:The writ applicant contended that the DGGSTI, Zonal Unit, Ahmedabad, had no jurisdiction to issue summons as the investigation was already being conducted by the Central Excise and Service Tax, Central Tax Delhi South Commissionerate. The applicant relied on the definition of 'proper officer' under Section 2(91) of the CGST Act, which states that the proper officer is the Commissioner or the officer of the Central Tax assigned by the Commissioner in the Board. The applicant argued that since the Delhi South Commissionerate was already investigating, the DGGSTI, Ahmedabad, should not conduct a parallel inquiry.3. Whether Multiple Agencies Can Conduct Parallel Investigations on the Same Subject Matter:The court observed that the writ applicant was aggrieved by the fact that two different agencies were conducting investigations on the same subject matter. The respondents argued that the case against the petitioner was linked to another investigation by the DGGSTI against M/s SSM Exports, which was not under the jurisdiction of the CGST, Delhi South Commissionerate. The respondents justified the summons by explaining that the investigations indicated irregular ITC availed by M/s SSM Exports, which impacted the petitioner. The court noted that only one agency, the DGGSTI, was pursuing the investigation against the petitioner, and the contention of parallel inquiries was baseless.4. Conditions for Availing Input Tax Credit (ITC) Under the CGST Act, 2017:The respondents highlighted that the investigation was related to the fraudulent ITC availed by the petitioner. They referred to Section 16 of the CGST Act, which stipulates conditions for availing ITC, including actual payment of tax and receipt of goods or services. The respondents argued that the ITC availed by the petitioner was fraudulent as the goods were not actually received by the supplier, making the petitioner ineligible for ITC. The court acknowledged the respondents' stance that the investigation was primarily into the vitiated ITC passed on by the supplier to the petitioner.5. Maintainability of Writ Petitions Challenging Summons:The court referred to several judgments, including the Supreme Court's decision in Commissionerate of Customs, Calcutta vs. M.M. Exports, which held that High Courts should not interfere at the summons stage except in exceptional cases. The court also cited Union of India vs. Rajnish Kumar, Tuli, where the Supreme Court allowed the Directorate of Revenue Intelligence to issue appropriate summons. The court concluded that a writ petition challenging a summons is not maintainable and decided not to interfere at the stage of summons issuance.Conclusion:The court rejected the writ application, stating that the summons issued by the DGGSTI, Zonal Unit, Ahmedabad, were valid and within jurisdiction. The court emphasized that multiple agencies could conduct investigations if justified and that the conditions for availing ITC were not met by the petitioner. The court also held that writ petitions challenging summons are generally not maintainable, except in exceptional cases. The interim protection granted earlier was vacated.