2024 (4) TMI 419 - HC - GST

Parallel Central vs State GST investigations over same tax dispute u/s6(2)(b); writ refused, objections allowed in reply

The dominant issue was whether Central GST authorities could initiate and continue proceedings, including summons and a show cause-cum-demand notice, when ... Simultaneous investigation by the Central and State GST authorities - Challenged summons issued, even after a lapse of 15 days - Violation of the circular issued by the Central Board of Excise - suppression of transaction concerning supply of goods/services or suppression of stock or goods - Overlapping of tax periods in the pending case - show cause-cum-demand notice - HELD THAT:- There is no ambiguity in the language of Section 6(2)(b) of the CGST/OGST Act, which bars initiation of proceeding by a proper officer under CGST Act where a proper officer under the State Goods and Services Act or the Union territory Goods and Services Tax Act has initiated proceeding on a subject matter. The relevant fact to be borne in mind is the subject matter of the proceeding. If the subject matter of the proceeding is entirely different, there is no bar to the maintainability of the proceeding. What is barred is the initiation of the proceeding on the same subject matter by the proper officer. The words “subject matter” can be equated with words “cause of action”. The reason behind barring the initiation of proceeding on the same subject matter by the proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Act seems to be that the possibility of the final decision in the two proceedings being different cannot be totally ruled out which would create confusion. In the case of Vallabh Das v. Madan Lal and Ors. [1970 (4) TMI 168 - SUPREME COURT], it is held that the expression “subject matter” is not defined in the Civil Procedure Code. That expression includes the cause of action and the relief claimed. Unless the cause of action and the relief claimed in the second suit are the same as in the first suit, it cannot be said that the subject matter of the second suit is the same as that in the previous suit. In the present case, the opposite parties have disputed that the proceedings initiated by the officer under the State GST Act and the show cause notice issued by the DGGI relate to the same “subject matter”. It is the specific ground on behalf of opposite party No.1 that the Central GST authority had initiated investigation of suppression of transaction by the petitioner. The DGGI was investigating clandestine supply by the petitioner during the month of March, 2022 only whereas investigation by CT and GST was with reference to receipt of materials from one supplier i.e. M/s. Anamika Enterprises. Be that as it may, in view the nature of the order which we intend to pass in the present matter, we refrain ourselves from recording any definite opinion at this stage that the impugned show cause notice issued by the DGGI is barred or not by virtue of operation of Section 6(2)(b) of the CGST/OGST, Act considering the dispute raised in this regard on behalf of opposite parties No.1 and 2. We see no reason why the petitioner did not respond to the summons issued by the DGGI taking a plea that it was barred by Section 6(2)(b) of the CGST/OGST Act. Further, in the present case, a show cause-cum-demand notice has already been issued on 29.12.2023. Such being the position, we decline to interfere in the present matter. The petitioner shall have the liberty to respond to the said show cause-cum-demand notice dated 29.12.2023 and take appropriate recourse to the provisions of the CGST Act. Since we have refrained ourselves from expressing any definite opinion as to whether the case of the petitioner is covered by Section 6(2)(b) of the CGST/OGST Act, it would be open for petitioner to take the said plea before the appropriate forum in appropriate proceeding. These writ petitions are, accordingly, disposed of with the liberty as aforesaid. Issues Involved:1. Legality of the summons issued u/s 70 of the CGST Act.2. Jurisdictional conflict between Central and State GST authorities.3. Validity of the show cause-cum-demand notice issued on 29.12.2023.Summary:Legality of the Summons Issued u/s 70 of the CGST Act:The petitioner, a registered dealer under the GST Act, challenged the summons issued by the Senior Intelligence Officer, Directorate General of Goods and Service Tax (DGGI), Zonal Unit, Bhubaneswar, u/s 70 of the CGST Act. The petitioner argued that the summons was issued for financial years 2017 to 2021-2022, but the accounts for the year 2021-2022 were not due for submission. The petitioner also objected to the summons through counsel and registered post, but the objections were not honored. The petitioner contended that the action of the DGGI was in violation of a circular dated 05.10.2018 issued by the Central Board of Excise and Customs (CBEC), which mandates coordination between Central and State Tax authorities.Jurisdictional Conflict Between Central and State GST Authorities:The petitioner argued that the DGGI should not have initiated proceedings as a verification proceeding was already pending before the State Government. The petitioner relied on Section 6(2)(b) of the CGST/OGST Act, which bars the initiation of proceedings by a Central authority if a State authority has already initiated proceedings on the same subject matter. The opposite parties contended that the investigations by the Central and State authorities were on different issues. The DGGI was investigating clandestine supply by the petitioner during March 2022, while the State authority was investigating receipt of materials from a supplier, M/s. Anamika Enterprises. The court noted that the subject matter of the proceedings must be the same for Section 6(2)(b) to apply, and in this case, the subject matters were different.Validity of the Show Cause-cum-Demand Notice Issued on 29.12.2023:The petitioner also challenged the show cause-cum-demand notice dated 29.12.2023, issued pursuant to the disputed summons. The court observed that the petitioner should have responded to the summons and raised the plea that it was barred by Section 6(2)(b) of the CGST/OGST Act. Given that a show cause-cum-demand notice had already been issued, the court declined to interfere at this stage. The petitioner was granted the liberty to respond to the show cause-cum-demand notice and take appropriate recourse to the provisions of the CGST Act. The court refrained from expressing any definite opinion on whether the case was covered by Section 6(2)(b) of the CGST/OGST Act, leaving it open for the petitioner to take the plea before the appropriate forum.Conclusion:The writ petitions were disposed of with the liberty for the petitioner to respond to the show cause-cum-demand notice and take appropriate legal recourse.