GST authorities must avoid simultaneous proceedings for same assessee and overlapping periods under Section 70

The Patna HC ruled on jurisdictional conflicts between state and central tax authorities conducting simultaneous proceedings under GST laws. The Central Tax Authority had initiated proceedings under CGST Act Section 70 for assessment years 2017-18 to 2021-22, while State Tax Authority commenced audit for 2017-18. The court held that when proceedings involve the same assessee for overlapping periods, the authority that initiated proceedings first should continue while the other stays proceedings. The court directed Central Tax Authority to proceed with their inquiry initiated in July 2021, while State Tax Authority's February 2022 proceedings were ordered to remain in abeyance until central proceedings conclude.

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Issues involved:
The issues involved in the judgment are related to the simultaneous proceedings initiated by different tax authorities for identical assessment years, the authority of the 'Proper Officer' under the Bihar Goods and Services Tax Act, 2017, and the conflict arising when both Central and State Tax Authorities have jurisdiction over the same area or assessee.

Judgment Details:

1. The petitioner, an assessee under the Bihar Goods and Services Tax Act, 2017, raised concerns about notices issued by two Tax Authorities for the same assessment years. The petitioner argued that one inquiry should proceed first, and the other should be stayed until the conclusion of the initial proceedings, citing Section 6 of the BGST Act.

2. The definition of a 'Proper Officer' under the GST enactments was discussed, highlighting the powers and duties of Officers appointed under the Central and State GST Acts. The notification under the CGST Act allows Officers to be appointed as 'Proper Officer' with territorial jurisdiction, leading to instances where both Central and State Tax Authorities have simultaneous jurisdiction over an area.

3. Section 6 of the Central and State GST enactments harmonizes the cross enforcement of Officers under both Acts. It authorizes 'Proper Officers' to issue orders under both Acts and prevents the jurisdictional Officer under one enactment from initiating proceedings on the same subject matter if the other Officer has already begun. This applies to Union Territories as well.

4. A circular issued by the CBEC clarified that Officers of both Central and State Tax Authorities can independently initiate enforcement actions regardless of the administrative assignment of taxpayers, allowing them to complete the entire investigation process without transferring the case to the other authority.

5. The petitioner had been issued notices by both State and Central Tax Authorities for different assessment years. The Court noted that the Central Tax Authority had initiated proceedings first, and therefore, directed the State Tax Authority to keep its proceedings in abeyance until the Central Tax Authority completes its investigation.

6. Referring to a previous decision of the High Court of Delhi, the Court emphasized that when proceedings are initiated by both Central and State Tax Authorities, the investigation can be transferred to a single authority to streamline the process. However, in the present case, since the proceedings were against the same assessee, the State Tax Authority was directed to halt its proceedings until the Central Tax Authority concludes its investigation.

7. The judgment allowed the writ petition, directing the State Tax Authority to suspend its proceedings while the Central Tax Authority completes its investigation, emphasizing compliance with the Central Tax Authority's notices and the transmission of relevant documents from the State to the Central Tax Authority.

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