2024 (2) TMI 127 - HC - GST

Tax Authorities Barred from Issuing Multiple Show Cause Notices for Same Input Tax Credit Violation Under Section 74

HC ruled that multiple Show Cause Notices by different tax authorities for the same ITC violation against a registered assessee constitute procedural ... Prohibition on duplicate adjudication for the same subject-matter - jurisdictional allocation between Central and State under sub-clause (b) of Section 6(2) of the CGST/SGST scheme - interim restraint on proceedings pending resolution of representationProhibition on duplicate adjudication for the same subject-matter - jurisdictional allocation between Central and State under sub-clause (b) of Section 6(2) of the CGST/SGST scheme - Whether the CGST authorities could proceed with the Show Cause Notice dated 27.12.2023 when SGST authorities had already initiated proceedings by Show Cause Notice dated 01.12.2023 in respect of the same alleged wrongful availing of Input Tax Credit for June, 2018 March, 2019. - HELD THAT: - The Court noted that the SGST authorities had initiated proceedings by Show Cause Notice dated 01.12.2023 and that the petitioner had filed a reply to that notice. In view of the statutory prescription contained in sub-clause (b) of sub-section (2) of Section 6 of the CGST/SGST scheme concerning allocation of jurisdiction between Centre and State and the avoidance of overlapping proceedings, the CGST authorities ought not to have issued a second Show Cause Notice on the same subject-matter dated 27.12.2023 while the SGST proceedings remained pending. Having regard to the materials on record and the competing notices, the Court directed that the respondent CGST authorities shall not proceed further in terms of the Show Cause Notice dated 27.12.2023 until the next date of listing so that the representation filed before the CGST authorities can be considered and further instructions obtained. [Paras 6]CGST authorities restrained from proceeding with the Show Cause Notice dated 27.12.2023 until the next date of listing.Final Conclusion: Proceedings under the Show Cause Notice dated 27.12.2023 issued by the CGST authorities are stayed temporarily; the CGST shall not proceed further on that notice till the next listing, having regard to the prior SGST proceedings and the allocation of jurisdiction under sub-clause (b) of Section 6(2). Issues involved: Alleged violation of Section 16[4] of the CGST Act, 2017 by the petitioner, issuance of multiple Show Cause Notices by different authorities on the same subject matter.Summary:The petitioner, a registered assessee under the CGST Act, 2017, was served a notice alleging wrongful availing of Input Tax Credit (ITC). Subsequently, multiple Show Cause Notices were issued by different authorities for the same violation. The petitioner contended that such action violated the statutory provisions of the CGST Act, 2017/SGST Act, 2017.The learned counsel for the petitioner argued that once proceedings were initiated by the SGST authorities, the CGST authorities could not issue another Show Cause Notice on the same subject matter. This was deemed as a violation of the statutory prescription under Section 6 of the CGST Act, 2017/SGST Act, 2017.The Standing Counsel for CGST requested time to obtain instructions regarding the petitioner's representation against the Show Cause Notice. The case was listed for further hearing on 07.02.2024 to determine if any decision had been made by the CGST authorities on the representation.In light of the materials on record and the statutory provisions, the High Court directed that the CGST authorities should not proceed further on the Show Cause Notice dated 27.12.2023 until the next date of listing on 07.02.2024.