Tax Probe Limits: Authorities Restricted from Parallel Investigations Under GST Rules to Prevent Duplicative Enforcement Actions

The HC addressed a jurisdictional challenge to tax investigation summons. The court partially allowed the petition, permitting investigation into transactions with one entity while prohibiting parallel probes by Central and State authorities into transactions with two other entities. The ruling emphasized avoiding duplicative tax investigations and respecting jurisdictional boundaries under GST regulations.

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Issues:
1. Challenge to summons dated 21.06.2024 and 05.07.2024 on grounds of jurisdiction.
2. Allegation of parallel proceedings and request for clarity on subject matter.
3. Investigation into irregular and inadmissible Input Tax Credit (ITC).
4. Verification of ITC availed by the Petitioner from specific parties.
5. Disposal of writ petition and directions for further investigation.

Detailed Analysis:
1. The Petitioner challenged the summons dated 21.06.2024 and 05.07.2024, arguing that the Central Authorities lacked jurisdiction due to investigations by State Authorities concerning transactions of M/s Ridhi Industries and M/s Amazonite Steel Private Ltd. under Section 6(2) of the Central Goods and Service Tax Act, 2017.

2. The Petitioner contended against parallel proceedings, seeking clarification on the subject matter. The Court directed the Respondent No.3 and Respondent No.5 to confirm if the impugned summons related to the same investigations conducted by the State Unit, emphasizing the need to avoid duplicative investigations.

3. The State GST was investigating irregular and inadmissible Input Tax Credit (ITC) from M/s Ridhi Industries and M/s Amazonite Steels Pvt. Ltd. The Standing counsel for CGST explained that investigations by the Central Authorities would close such matters to prevent parallel probes as per Section 6(2) of the CGST Act, 2017.

4. The Petitioner expressed no objection to the investigation concerning ITC from M/s IESA Sales Private Ltd. The Court was presented with an instruction from the Assistant Commissioner of State Taxes confirming the genuineness and eligibility of ITC availed by the Petitioner from M/s Ridhi Industries and M/s Amazonite Steels Private Ltd.

5. Following submissions and document verification, the Court disposed of the writ petition. It allowed investigation into transactions with M/s IESA Sales Pvt. Ltd. but prohibited further investigation into transactions with M/s Ridhi Industries and M/s Amazonite Steels Private Ltd. based on the communication dated 09.08.2024 issued by State Authorities.

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