GST investigation transfers to DGGI upheld as permissible under CGST Act Section 6(2)(b)

The Delhi HC dismissed writ petitions challenging the transfer of GST investigations from multiple Commissionerates to DGGI, AZU. The court held that centralizing investigations under one umbrella authority was permissible as neither CGST Act nor SGST Act prohibited such transfers. DGGI, AZU possessed pan-India jurisdiction and authority to investigate the petitioners. The court found that Section 6(2)(b) of CGST Act and Circular dated 05.10.2018 were not applicable to the case facts. The transfer was deemed appropriate for comprehensive investigation across multiple jurisdictions, with the court noting that such decisions depend on individual case circumstances rather than inflexible rules.

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Issues Involved:
1. Multiple summons and search operations by different agencies.
2. Jurisdiction of officers under the CGST Act.
3. Applicability of Section 6(2)(b) of the CGST Act.
4. Binding nature of the Circular dated 05.10.2018 issued by the CBEC.
5. Transfer of investigation to DGGI, AZU.

Issue-wise Detailed Analysis:

1. Multiple Summons and Search Operations by Different Agencies:
The petitioners contended that the issuance of multiple summons and search operations by different agencies violated Section 6(2)(b) of the CGST Act and the Circular dated 05.10.2018. They argued that once the jurisdictional Commissionerate initiated proceedings, no other CGST officer had the jurisdiction to proceed against them. The respondents countered that the complexity and the pan-India nature of the alleged fake Input Tax Credit (ITC) scam necessitated the involvement of multiple agencies and the eventual transfer of the investigation to the DGGI, AZU.

2. Jurisdiction of Officers under the CGST Act:
The court analyzed the provisions of the CGST Act, particularly Sections 3, 5, and 6, which empower both Central and State tax officers with jurisdiction over specified territories and, in some cases, all-India jurisdiction. The court noted that the CGST Act aims to create a harmonized structure for GST administration, allowing for cross-empowerment of officers to avoid overlapping jurisdictions and ensure comprehensive investigations.

3. Applicability of Section 6(2)(b) of the CGST Act:
Section 6(2)(b) of the CGST Act prevents the initiation of proceedings by a CGST officer if a State GST officer has already initiated proceedings on the same subject matter. The court found that this provision aims to prevent multiple agencies from investigating the same taxpayer for the same issue, thereby protecting taxpayers from harassment. However, the court clarified that this provision does not apply when investigations involve multiple taxpayers or have a pan-India scope, as in the present case.

4. Binding Nature of the Circular dated 05.10.2018 Issued by the CBEC:
The petitioners argued that the Circular dated 05.10.2018, which allows both Central and State tax officers to initiate and complete intelligence-based enforcement actions, was binding on the department. The court, however, held that the Circular has a limited application and cannot be extended to cover all situations arising in the implementation of the GST regime. The Circular is intended to prevent overlapping jurisdiction and ensure harmonious functioning between Central and State tax authorities, but it does not address situations involving complex, multi-jurisdictional investigations.

5. Transfer of Investigation to DGGI, AZU:
The court found that the transfer of the investigation to the DGGI, AZU, was justified given the pan-India nature of the alleged ITC scam and the involvement of multiple entities across different jurisdictions. The court noted that there is no prohibition in the CGST Act against such transfers and that the DGGI, AZU, has the necessary jurisdiction to conduct a comprehensive investigation.

Summary of Findings:
The court concluded that the investigations were initiated by various jurisdictional authorities against different entities, and a common thread was found, leading to the transfer of the investigation to the DGGI, AZU. The court held that Section 6(2)(b) of the CGST Act and the Circular dated 05.10.2018 have limited application and do not apply to the facts of the present petitions. The court dismissed the writ petitions and the contempt case, finding no merit in the arguments presented by the petitioners.

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