SGST authorities cannot initiate proceedings when another GST authority already investigating same assessment period

The Delhi HC allowed a petition challenging proceedings initiated by SGST authorities through Show Cause Notices. The petitioner contended that once an investigation had commenced by one authority, it would be impermissible for State GST authorities to examine the same period or pass any assessment order. The HC accepted this argument and quashed the impugned order, ruling in favor of the petitioner. The decision establishes that concurrent proceedings by different GST authorities examining the same assessment period are not permissible once one authority has already initiated investigation proceedings.

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Issues:
Challenging SGST authorities' proceedings based on CGST Act Section 6 (2) (b) in relation to Show Cause Notices for FY 2017-18 and 2018-19.

Analysis:
The judgment involves two writ petitions challenging the initiation of proceedings by the State Goods and Service Tax (SGST) authorities through Show Cause Notices (SCN) for the Financial Years (FY) 2017-18 and 2018-19. The challenge is primarily based on Section 6 (2) (b) of the Central Goods and Services Tax Act, 2017 (CGST) concerning an investigation initiated by the authorities, arguing that the State GST authorities cannot assess the same period or issue any order post that investigation. The court referred to its previous rulings in similar matters for guidance.

The court cited its previous judgment in DLF Home Developers Limited case regarding demands related to Input Tax Credit (ITC) reversal on non-business transactions and exempt supplies. The court highlighted that two authorities cannot simultaneously proceed on the same issue. Respondent no.1 was found to be aware of this and proceeded to confirm the demand without adjudicating it. The court agreed with the petitioner's contention that respondent no.1 cannot adjudicate a demand already under investigation by another authority, in this case, the Directorate General of GST Intelligence (DGGI).

The learned counsel for respondent no.1 agreed to set aside the demand related to ITC reversal on non-business transactions and exempt supplies as it falls under the purview of the DGGI's investigation. Consequently, the court directed the impugned demand to be set aside in this regard. The court allowed the writ petitions, quashing the impugned orders and SCN issued for FY 2017-18 and 2018-19. The court also specified that the concerned authority should adjudicate the issue based on the show cause notice issued by the DGGI.

The court ruled that the SGST authorities can review the steps to be taken post the DGGI's investigation's conclusion. It kept all rights and contentions of the parties open for further proceedings. The judgment provided clarity on the jurisdictional limits of different tax authorities and the procedural fairness required in such matters.

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