Delhi HC upholds blocking of electronic credit ledger under Section 25 and 67(2) despite separate tax registration

The Delhi HC dismissed a petition challenging the blocking of electronic credit ledger under Section 25 read with Section 67(2) and Article 19(1)(g). The petitioner's account was blocked at DGGI Chennai's instance, though neither Delhi State Authority nor DGGI Chennai conducted investigations. Despite sharing business premises with investigated connected entities, the petitioner maintained separate tax registration. The court held that investigations of other entities cannot prevent DGGI Jaipur from investigating the petitioner company based on available information, finding no grounds to interdict the investigation.

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Issues:
The issues involved in the judgment are the petitioner challenging the investigations being conducted by the Directorate General of Goods and Service Tax Intelligence (DGGI), Zonal Unit, Jaipur, in relation to the petitioner's affairs.

Judgment Summary:

Investigation Jurisdiction:
The petitioner contended that DGGI, Jaipur, cannot conduct an investigation as the petitioner had already been investigated by the Delhi State Authority for the same period. The petitioner relied on a circular clarifying that both central and state tax authorities can initiate enforcement actions regardless of administrative assignment. However, it was found that no investigation was conducted by any authority regarding the petitioner's company, thus the provisions of the CGST Act were not attracted.

Bank Account Blockage and Registration Cancellation:
The petitioner's bank account and GST registration were blocked by the Delhi State Authority due to an investigation related to dealings with M/s Girdhari Exports. The registration was later restored after the petitioner responded to show cause notices and provided necessary documents. The Input Tax Credit (ITC) was also blocked but subsequently unblocked after a stipulated period.

DGGI Investigations:
DGGI, Chennai, had not investigated the petitioner but was concerned with M/s Balaji Enterprises. The petitioner's bank account was provisionally attached due to its association with Mr. Sandeep Singhal, who was also the Director of the petitioner company. The provisional attachment was made to protect the interest of revenue, and no investigation was conducted into the petitioner's transactions.

Court's Decision:
The Court found that no investigation was conducted by any authority regarding the petitioner's company, and the provisions of the CGST Act were not applicable. The reliance on the circular was deemed misplaced as the authorities empowered to conduct investigations had not done so. The petitioner's connection to other entities investigated by DGGI, Chennai, did not provide any advantage. As the petitioner had a separate tax registration, investigations could proceed based on specific information without interference. Consequently, the petition was disposed of, allowing DGGI, Jaipur, to continue its investigation into the petitioner company.

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