2023 (10) TMI 143 - HC - GST

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

Amit Gupta Versus Union of India and Ors.

The HC held that investigations by different authorities focusing on distinct aspects of the supply of goods do not constitute impermissible parallel ... Parallel proceedings or not - Multiple investigations being conducted by the different authorities in respect of the supply of goods received and made by the petitioner - diversion of agriculture urea for sale as technical grade urea - wrongful availment of the ITC - HELD THAT:- The focus of the DGGI’s investigation is somewhat different from the focus of the investigation being commenced by the Jurisdictional Commissionerate. The Jurisdictional Commissionerate is not investigating the diversion of agricultural grade urea. However, it cannot be disputed that the investigation regarding the availment of the ITC is common to the investigations conducted by both the authorities. There are no multiple proceedings in regard of the central and the state officers being authorized as proper officers, Clause (b) of Section 6(2) of the Act provides that where a proper officer under the SGST Act and the UGST Act has initiated proceedings on a subject matter, the proper officer under the Act would not initiate proceedings “on the same subject matter”. This provision of CGST is also mirrored by Clause (b) of Section 6(2) of the SGST Act and UGST Act as well. Thus, where a proper officer under the CGST Act had initiated proceedings on a subject matter, no proceedings would be initiated by proper officer authorized under the SGST Act or UGST Act on the same subject matter. In the present case, the focus of investigation by the DGGI was in respect of the diversion of agriculture urea for sale as technical grade urea. The issue regarding wrongful availment of the ITC is also inextricably linked with the subject matter of investigation by respondent no. 3. In terms of Section 6(2)(b) of the Act, where a proper officer has initiated the proceedings in respect of the subject matter, no proceedings in respect of the same subject matter are required to be initiated by a proper officer under the said Act and the SGST Act and vise versa. Confining the proceedings to silos of a subject matter may in certain cases lead to parallel proceedings. Therefore, the device of transferring investigations or proceedings inter se proper officers to ensure that a taxpayer is not subjected to parallel proceedings, in effect, subserves the object of Section 6(2)(b) of the CGST/SGST/UGST Act - It cannot be accepted that the provisions of Section 6(2)(b) of the Act can be interpreted to proscribe consolidation of investigation or proceedings in a single authority where warranted. The petitioner’s insistence on the authority which should conduct the investigation is unjustified. As noted, at the outset, the petitioner’s grievance was in respect of conduct of parallel proceedings. The said grievance perished with respondent no. 3 agreeing to the DGGI continuing the investigation from the stage, as obtaining before it. Petition disposed off. 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.