Can Tax Authorities Maintain Parallel CGST Proceedings in Different Locations for Same Alleged Evasion?

The HC examined whether parallel CGST proceedings could be maintained in two different locations (Siliguri and Kolkata) for the same alleged tax evasion incident. The petitioner company and its director argued that dual proceedings were not maintainable. Finding an arguable case, the Court admitted the petition for further hearing and stayed the Kolkata proceedings until February 9, 2022. The Court directed the respondents to file an affidavit-in-opposition within three weeks, with petitioners allowed to reply within seven days thereafter. The stay aimed to prevent unnecessary hardship and ensure procedural fairness.

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Issues:
1. Maintainability of two parallel proceedings under CGST Act in two different places over the same incident and cause of action against the petitioner.

Analysis:
The judgment delivered by the High Court of Calcutta revolves around the issue of whether two parallel proceedings under the Central Goods and Services Tax (CGST) Act can be maintained in two different locations concerning the same incident and cause of action against the petitioners. The petitioners, a Private Limited Company and its Director, were involved in the business of Whole Leaf Tobacco in Siliguri. Officers of the Directorate General of GST Intelligence, Siliguri Zonal Unit, conducted a search at the company's premises and seized certain books of accounts under two seizure lists. Subsequently, summons were served to the petitioners at the location in Siliguri under Section 70 of the CGST Act. However, the petitioners were also summoned to appear at the Office of the Directorate General of Goods and Services Tax in Kolkata regarding the same incident, raising jurisdictional concerns.

The petitioners contended that two parallel proceedings in different locations were not prima facie maintainable against them. The Court, after examining the documents attached to the writ petition and hearing the arguments of the petitioners' counsel, found that an arguable case had been presented. Therefore, the Court admitted the petition for further hearing. The respondents were directed to file an affidavit-in-opposition within three weeks and serve a copy to the petitioner's advocate. The petitioners were given the opportunity to file an affidavit-in-reply within seven days thereafter.

Considering the duplicity of proceedings over the same alleged tax evasion incident and the prevailing circumstances of a surge in Covid cases, the Court ordered a stay on the proceedings initiated against the petitioners in Kolkata until 9th February 2022 or until further notice. This decision aimed to prevent unnecessary hardship to the petitioners and ensure a fair legal process. The judgment highlighted the importance of avoiding multiple proceedings on the same matter and the need for clarity in jurisdictional issues under the CGST Act to uphold the principles of natural justice and procedural fairness.

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