Judge grants stay on State GST authorities' summons, rules blocking credit ledger not 'proceeding'. Affidavit exchange ordered.

The judge granted a stay on the summons issued by State GST authorities, finding it contravened the WBGST Act. The blocking of the electronic credit ledger was deemed not a 'proceeding' under the Act. Affidavits on the validity of Rule 86A of CGST/WBGST Rules and Section 16(2)(c) of CGST/WBGST Act were to be exchanged. Parties had four weeks to file affidavits-in-opposition, with a two-week reply period. The order did not hinder Central GST authorities from continuing lawful actions. The case would resume post-affidavit exchange, with urgent certified copies of the order to be issued to the parties.

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Issues:
Challenge to vires of Rule 86A of CGST/WBGST Rules and Section 16(2)(c) of CGST Act/WBGST Act; Actions by State GST authorities regarding summons issued and blocking of electronic credit ledger.

Analysis:
The petitioners in this case have challenged the validity of Rule 86A of the CGST/WBGST Rules and Section 16(2)(c) of the CGST/WBGST Act. They also contest the actions taken by the State GST authorities concerning the summons issued on October 19, 2020, and the subsequent blocking of the electronic credit ledger on December 8, 2020. Counsel for the petitioners argued that as proceedings were already pending under the CGST Act, the State GST authorities had no jurisdiction to initiate separate actions. He relied on Section 6(2)(b) of the WBGST Act to support this contention and also cited a circular from the Ministry of Finance to strengthen his argument.

During the hearing, the Additional Solicitor General representing the Union of India, along with counsels for the State CGST and CGST, presented their arguments. The judge, after considering the submissions, found that the summons issued by the State GST authorities on October 19, 2020, prima facie contravened Section 6(2)(b) of the WBGST Act. Consequently, the judge ordered a stay on the summons and any related proceedings. Regarding the blocking of the electronic credit ledger, the State authorities contended that this action was carried out on behalf of the Central authorities and did not fall under the definition of a 'proceeding' as outlined in the WBGST Act.

As the validity of Rule 86A of the CGST/WBGST Rules and Section 16(2)(c) of the CGST/WBGST Act was under dispute, the judge directed the exchange of affidavits on this matter. Parties were instructed to file affidavits-in-opposition within four weeks, with a two-week period for replies. Importantly, the judge clarified that the order issued did not prevent the Central GST authorities from proceeding lawfully and continuing with any ongoing actions initiated by them. The case was scheduled to be heard again after the completion of the affidavit exchange process. Additionally, the judge directed the issuance of an urgent certified copy of the order to the parties upon fulfillment of all necessary requirements.

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