2020 (9) TMI 1060 - HC - GST

Court affirms decision on investigation venue transfer, citing COVID-19 and logistical concerns.

The court upheld the decision not to transfer the investigation proceedings of a jewellery business group concern from Ernakulam to Kollam due to COVID-19 ... Investigation into related business entities - maintenance of books of accounts in business premises under Section 35 of the CGST and KsGST Act, 2017 - digital maintenance of accounts - departmental discretion in allocation of investigating officer - assessee's inability to choose investigating officer - judicial interference under Article 226 - production of books of accounts in digital modeInvestigation into related business entities - departmental discretion in allocation of investigating officer - assessee's inability to choose investigating officer - Whether the High Court should direct transfer of investigation from the officer authorised at Ernakulam to an officer at Kollam or require the Department to sit at Kollam for the petitioners' matters. - HELD THAT: - The Court upheld the learned Single Judge's conclusion that the State's tax officers conducting investigation at Ernakulam were authorised to continue proceedings. The Department had recorded substantial factual grounds-including numerous inspections concentrated in Ernakulam and Thrissur and variations in stock at the Ernakulam branch-justifying continuation by the Ernakulam officer. The Court rejected the contention that the petitioners may dictate the situs of investigation or select the investigating officer; allocation of officers is a matter for the Department's administration and not the assessee's choice. Requests based on location of the petitioners' lawyer or convenience were held insufficient to displace the Department's decision to proceed at Ernakulam. [Paras 3, 4, 5]Refusal to transfer the investigation or require the Ernakulam officer to conduct proceedings from Kollam affirmed; no interference under Article 226 with the Department's allocation of the investigating officer.Maintenance of books of accounts in business premises under Section 35 of the CGST and KsGST Act, 2017 - digital maintenance of accounts - production of books of accounts in digital mode - Whether the petitioners' claim that books are maintained at Head Office in Kollam justifies shifting proceedings, and whether books may be produced in digital form. - HELD THAT: - Relying on the Department's statement and the statutory requirement that books be maintained at business premises, the Court accepted the Department's position that the books could not be treated as necessarily located at the Head Office for purposes of shifting the investigation. The Department also stated that accounts are maintained digitally, undermining the petitioners' ground that voluminous physical transport justified relocation. Consequently, the Court allowed production of books in digital mode and granted the petitioners one month's time for production from the date of the order. [Paras 3, 6]Petitioners' contention about books being at Head Office rejected; production may be in digital mode and one month's time granted for production.Judicial interference under Article 226 - Whether any additional protective directions were required concerning supply of copies of documents seized and intended to be relied on by the Department. - HELD THAT: - The Court noted that the learned Single Judge had already made adequate safeguards regarding supply of copies of seized documents, which were not challenged before the Division Bench. The Court reiterated and reaffirmed those safety measures without altering them. [Paras 6]Existing safeguards regarding supply of copies of seized documents affirmed; no further directions issued.Final Conclusion: Writ appeals dismissed in limine; no interference with the Single Judge's refusal to transfer or relocate the investigation, production of books allowed in digital mode with one month's time, and prior safeguards for supply of seized documents reaffirmed. Issues involved:1. Jurisdictional authority for investigation into the affairs of a group concern in the jewellery business.2. Request for the transfer of investigation proceedings to an officer at a different location due to COVID-19 and logistical reasons.3. Discretion of the court under Article 226 regarding the transfer of proceedings.4. Assessee's choice in determining which officer should continue the proceedings.5. Feasibility of an officer holding sittings at a different location and the associated expenses.Analysis:1. The judgment pertains to an investigation initiated into a group concern named 'Chungath' engaged in the jewellery business. The State Tax Officer at Ernakulam was assigned to continue the proceedings following raids conducted at various business premises of the group. The petitioners, having separate registrations, sought the investigation to be conducted by an officer at Kollam due to the COVID situation and the volume of documents to be transported. The court considered the locations of the businesses and the maintenance of books of accounts in the decision-making process.2. The Single Judge's decision was based on the respondent's statement highlighting discrepancies in stock and business volume at the Ernakulam branch. The Department argued that the books of accounts should be maintained at the business premises as per the relevant tax laws. The refusal to transfer the proceedings was upheld, emphasizing the importance of the investigating officer's authorization and the location of the lawyer not being a determining factor for the investigation venue.3. The appellants' argument, reiterated before the court, did not sway the decision as the officer at Ernakulam was deemed suitable to handle the investigation based on the grounds provided in the statement. The court emphasized that the Department has the authority to decide which officer should continue the proceedings, and the assessee does not have the prerogative to choose the investigating officer.4. The feasibility of the officer holding sittings at Kollam, as suggested by the appellants, was dismissed due to practical constraints such as the officer's existing workload, the need for staff assistance, and the impracticality of shifting the office location. Ultimately, the court found no valid reason to interfere with the Single Judge's decision and granted a month's time for the production of books of accounts in digital format, maintaining the safety measures for document copies as directed by the Single Judge.5. Consequently, the Writ Appeals were dismissed in limine, affirming the refusal to transfer the investigation proceedings and upholding the authority of the Department in determining the investigating officer and venue for the proceedings.