State and Central GST authorities cannot pursue parallel proceedings on same matter under Section 6(2)(b)

HC held that concurrent jurisdiction of State and Central GST authorities under Section 6(2)(b) prevents multiple proceedings on same subject matter. Once State authority initiates proceedings, Central authority cannot transfer or commence separate proceedings for same matter. Court quashed Central authority's blocked credit ledger and summons, ruling that allowing dual proceedings would violate statutory provisions and constitute abuse of process. State authority that commenced proceedings must continue to logical conclusion. Petition allowed, finding merit in petitioner's challenge to Central authority's parallel action.

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Issues Involved:
1. Jurisdiction of Respondent No. 2 under the CGST Act.
2. Validity of the Blocked Credit Ledger dated 16.05.2024.
3. Adherence to principles of natural justice.
4. Interpretation of Section 6 of the CGST Act, 2017.
5. Cross empowerment of State and Central Tax officers.

Issue-wise Detailed Analysis:

1. Jurisdiction of Respondent No. 2 under the CGST Act:
The petitioner contended that Respondent No. 2, Director General of Goods and Service Tax Intelligence, Rohtak, Haryana, acted without jurisdiction in issuing the summons dated 16.03.2024 and blocking the Input Tax Credit (ITC). The court observed that Section 6 of the CGST Act, 2017, and corresponding provisions in the SGST/UGST Acts empower officers of State and Central Tax authorities to act as proper officers for each other, subject to conditions specified by the government. The court emphasized that once a proper officer under the SGST Act has initiated proceedings, no parallel proceedings can be initiated by an officer under the CGST Act on the same subject matter, as per Section 6(2)(b) of the Act.

2. Validity of the Blocked Credit Ledger dated 16.05.2024:
The court found that the Blocked Credit Ledger dated 16.05.2024, which appeared on the petitioner's online portal on 20.05.2024, was issued by Respondent No. 2 without following the mandatory procedure and without affording an opportunity of hearing. The court held that such action was contrary to the principles of natural justice and the provisions of Section 6(2)(b) of the CGST Act, which prevents multiple proceedings on the same subject matter by different authorities.

3. Adherence to principles of natural justice:
The petitioner argued that Respondent No. 2 did not follow the principles of natural justice before blocking the ITC. The court noted that although summons were issued to the petitioner by Respondent No. 2, the petitioner was not given an adequate opportunity to present their case or respond to the allegations. The court reiterated that the principles of natural justice require that a party be given a fair opportunity to be heard before any adverse action is taken.

4. Interpretation of Section 6 of the CGST Act, 2017:
The court provided a detailed interpretation of Section 6 of the CGST Act, emphasizing its purpose to avoid multiple proceedings by different tax authorities on the same subject matter. The court explained that Section 6(2)(b) ensures that once proceedings are initiated by an officer under the SGST/UGST Act, no parallel proceedings can be initiated by an officer under the CGST Act. This interpretation was supported by circulars issued by the Ministry of Finance, which clarified that enforcement actions initiated by one tax authority should be completed by that authority without transferring the case to another.

5. Cross empowerment of State and Central Tax officers:
The court highlighted the cross empowerment of State and Central Tax officers under Section 6 of the CGST Act, which allows officers to act as proper officers for each other. However, this cross empowerment is subject to the condition that no parallel proceedings are initiated on the same subject matter. The court referred to internal communications and circulars to support the view that once an enforcement action is initiated by one authority, it should be taken to its logical conclusion by that authority without interference from the other.

Conclusion:
The petition was allowed, and the Blocked Credit Ledger dated 16.05.2024 and the summons dated 16.03.2024 issued by Respondent No. 2 were quashed and set aside. The court emphasized the importance of adhering to the principles of natural justice and avoiding multiple proceedings on the same subject matter by different tax authorities. Pending applications, if any, were also disposed of.

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