Different Authorities Can Investigate Distinct GST Issues Without Violating Section 6(2)(b) Parallel Proceedings Rule

The HC held that investigations by different authorities focusing on distinct aspects of the supply of goods do not constitute impermissible parallel proceedings under Section 6(2)(b) of the CGST/SGST/UGST Acts. While the DGGI investigated diversion of agricultural urea, the Jurisdictional Commissionerate's probe into wrongful ITC availment overlapped only partially. The court emphasized that where proceedings on the same subject matter are initiated by one proper officer, others must refrain from duplicative action, but consolidation or transfer of investigations between officers is permissible to avoid parallel proceedings. The petitioner's objection to the authority conducting the investigation was rejected, and the petition was disposed of after respondent agreed to let DGGI continue its investigation from the existing stage.

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Issues Involved:
1. Multiple investigations by different authorities.
2. Jurisdiction and authority of the DGGI to continue investigations.
3. Interpretation of Section 6(2)(b) of the Central Goods & Services Tax Act, 2017.
4. Transfer and consolidation of investigations.

Summary:

Issue 1: Multiple investigations by different authorities.
The petitioner was aggrieved by multiple investigations conducted by different authorities concerning the supply of goods from July 2017 to March 2022. The CGST Commissionerate, Delhi North, initiated the first investigation and collected Rs. 50,12,000/- without issuing a show cause notice. Subsequently, the Directorate General of GST Intelligence (DGGI) conducted a search and sealed the petitioner's premises. Despite representations, the DGGI continued its investigation.

Issue 2: Jurisdiction and authority of the DGGI to continue investigations.
The petitioner contended that the DGGI had no jurisdiction under Section 6(2)(b) of the Act, as the CGST Commissionerate had already initiated proceedings. The DGGI argued that its investigation was based on intelligence regarding the diversion of agricultural grade urea for industrial use, which is prohibited under the Essential Commodities Act, 1955. The DGGI alleged that the petitioner procured agricultural grade urea without paying GST, repackaged it as technical grade urea, and used fake invoices to show legitimate procurement.

Issue 3: Interpretation of Section 6(2)(b) of the Central Goods & Services Tax Act, 2017.
The court examined Section 6(2)(b) of the Act, which aims to prevent parallel proceedings by different authorities on the same subject matter. The court opined that the provision should be interpreted to avoid multiple proceedings and enable the transfer of investigations to a single authority when necessary. The court also referred to a Circular dated 05.10.2018, which clarified that officers of both Central and State tax authorities are authorized to initiate and complete intelligence-based enforcement actions.

Issue 4: Transfer and consolidation of investigations.
The court suggested consolidating the investigations to avoid overlapping issues. Respondent no. 3 agreed to transfer the investigation to the DGGI, which would continue from the same stage. The court emphasized that the object of Section 6(2)(b) is to avoid multiple proceedings and ensure a smooth and harmonious working of the statute. The court rejected the petitioner's contention that Section 6(2)(b) proscribes the transfer of investigations, stating that such an interpretation would lead to practical inconvenience and confusion.

Conclusion:
The court disposed of the petition, noting that the petitioner's grievance regarding parallel proceedings was resolved with the transfer of the investigation to the DGGI. The court upheld the consolidation of the investigation to avoid multiple proceedings and ensure efficient administration of justice.

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