TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1116
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.... been filed questioning propriety, legality and tenability of Order-in-Original dated 30.01.2025 passed by the Assistant Commissioner, Rourkela-I Division having jurisdiction of Rourkela-II Circle, Sundargarh exercising power under Section 74 of the Central Goods and Services Tax Act, 2017/the Odisha Goods and Services Tax Act, 2017 (Annexure-1) raising demands vide Summary of Order dated 31.01.2025 in Form GST DRC-07 pertaining to tax period from December, 2017 to March, 2018 (Annexure-2) and Summary of Order dated 31.01.2025 relating to tax period August, 2018 (Annexure-3). Facts adumbrated in the writ petition: 2. Relevant facts outlined by the petitioner leading to filing of the writ petition are culled out infra. 2.1. Being assigned to the jurisdiction under the State Tax Authorities having Registration No. GSTIN: 21AAIFT7741F2Z8 under the Odisha Goods and Services Tax Act, 2017/the Central Goods and Services Tax Act, 2017 (collectively be called hereinafter, "GST Act"), the petitioner, a partnership firm carrying on business of supply of service by way of execution of works contract, was adjudicated with liability comprising tax, interest and penalty qua tax period(s....
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....h Removal of Difficulties) Order, 2019 on 03.12.2019, Clause-2 of which reads as under: '2. For the removal of difficulties, it is hereby clarified that for the purpose of calculating: (a) the "three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal" in sub-section (1) of Section 112, the start of the three months period shall be considered to be the later of the following dates: (i) date of communication of order; or (ii) the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution under Section 109, enters office; (b) the "six months from the date on which the said order has been passed" in sub-section (3) of Section 112, the start of the six months period shall be considered to be the later of the following dates: (i) date of communication of order; or (ii) the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution under Section 109, enters office." In tune with the said Removal of Difficulties Order dated 03.....
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....ddition to the amount deposited earlier under Sub-Section (6) of Section 107 of the CGST/OGST Act, the Petitioners must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the CGST/OGST Act, for the Petitioners cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed. (ii) The statutory relief of stay on deposit of the statutory amount, in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to non-constitution of the Tribunal by the respondent-Authorities, the Petitioner would be required to present/file his appeal under Section 112 of the CGST/OGST Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal. (iii) In case the petitioner chooses not ....
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....December, 2017, March, 2018 and August, 2018 (covering Financial Years 2017-18 and 2018-19), which contained self-same allegations, which had already been dealt with by the State Proper Officer. Notwithstanding reply in Form GST DRC-06 was submitted on 30.07.2022 apprising the factual scenario along with relevant evidence before the DGGI, the Assistant Commissioner, Rourkela-I Division proceeded with the matter. In course of personal hearing on 11.09.2024, the petitioner stated to have reiterated its stand that based on Tax Evasion Report containing same sort of allegation of availing input tax credit on the strength of fake invoices issued by certain named suppliers relating to transactions effected during the tax periods from July, 2017 to March, 2018 and April, 2018 to March, 2019, the State Proper Officer had already completed proceedings under Section 74 of the GST Act, against which the appeals have also come to be concluded. Nonetheless, the Assistant Commissioner, GST and Central Excise, Rourkela-I Division, Rourkela (hereinafter be referred to as "Central Proper Officer") passed Order-in-Original on 30.01.2025 under Section 74 raising demand of tax, interest and penalty un....
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.... International, GSTIN: 21AVOPN5293M1ZZ and M/s. M.S. Traders, GSTIN: 21GJKPS2564G1Z1 and consequential wrongful availment of input tax credit, the State Proper Officer initiated proceeding under Section 74 of the GST Act on 02.07.2021 by issue of Show Cause Notice in Form GST DRC-01A for the tax period December, 2017 (Financial Year 2017-18) and later another two Show Cause Notices dated 30.07.2021 in Form GST DRC-01A for the tax periods March, 2018 (Financial Year 2017-18 and August, 2018 (Financial Year 2018-19). On 13.08.2021 Show Cause Notice has been issued by the Deputy Director, DGGI, Rourkela Regional Unit under Section 74 for the self-same tax periods relating to said Financial Years based on same allegations of wrongful claim of input tax credit by dint of fake invoices issued by named non-existent suppliers. He, therefore, arduously urged that same subject-matter could not be seized of by two authorities and independent demands on the very same allegations qua self-same transactions alleged to have been effected with the non-existent suppliers should have been raised. Thus, what is argued before this Court is essentially that both the demands under Section 74 of the GST ....
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.... suave submission that based on the Tax Evasion Report furnished by the Additional Director General, CBIC and Assistant Commissioner (Anti-Evasion), the State Proper Officer having initiated proceeding under Section 74, the Orders dated 12.04.2023 cannot be faulted with. He conceded that the Central Proper Officer has initiated proceeding under the said provisions with respect to same allegations at a later point of time. 6. Sri Avinash Kedia, learned Junior Standing Counsel, on instructions submitted that the events of proceeding by different authorities are not disputed. But summons under Section 70 being issued by the Central Authority on 24.05.2019 the initiation of proceeding preceded initiation of proceeding under Section 74 of the GST Act by the State Proper Officer; hence, the Order-in-Original dated 30.01.2025 cannot be stated to be bad in law. However, he would submit that interpretation of Section 6(2) vide judgment dated 14.08.2025 in the case of Armour Security (India) Ltd. Vrs. Commissioner, CGST, Delhi, 2025 INSC 982 = 2025 SCC OnLine SC 1700 being delivered after passing of the Order-in-Original dated 30.01.2025 under Section 74, the Central Proper Officer had no....
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..../DGGI/RRU/INV/Gr-A/ GST/2018/859, dated 24.05.2019 for recording of statement on 04.06.2019. Shri Sanjay Bangal appeared on the scheduled date of 04.06.2019 for making deposition and recording of statement. Further, his statement under Section 70 of the CGST Act, 2017 was recorded on the same day, i.e., on 04.06.2019 ***" ii. Order-in-Original dated 12.04.2023 passed by the Additional State Tax Officer, Rourkela-II Circle, Sundargarh (Annexure-7) reveals that, "This is an order under Section 74 of the OGST/CGST Act in case of M/s. Tansam Engineering and Construction Company bearing GSTIN: 21AAIFT7741F2Z8 and its principal place of business is located at Plot No. 1-4/9, 1st Floor, Civil Township, Area 7-8, Rourkela-769004 for tax period of March, 2018 in Financial Year 2017-18. This Order is the outcome of proceeding initiated for the Input Tax Credit wrongly availed/utilised by reason of fraud by the taxpayer, i.e., M/s. Tansam Engineering and Construction Company on the basis of fake/bogus invoices supplied by the non-existent business entity named M/s. M.S. Traders, GSTIN: 21GJKPS2564G1Z1 and its legal name is Mohan Sethi. *** On receipt of information ....
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....missioner (Anti-Evasion) GST and Central Excise, Rourkela Commissionerate vide Letter No. C. No. IV (06) 38/CPU/RKL/2020/6521-A, dated 02.06.2021, in which it is reported that the non-existent entity, i.e., M/s. M.G. International, GSTIN: 21AVOPN5293M1ZZ had passed on fake ITC without actual supply of goods to Tansam Engineering and Construction Company having GSTIN: 21AVOPN5293M1ZZ had passed on fake ITC without actual supply of goods to M/s. Tansam Engineering and Construction Company having GSTIN: 21AAIFT7741F2Z8, the undersigned verified the details of inward supply in GSTR-2A for the period 2017-18 *** Accordingly, intimation of tax ascertained as being payable under Section 74(5) of the OGST/CGST Act in Form GST DRC-01A was issued vide this Office Notices No. 5251, dated 02.07.2021 for payment of tax along with the applicable interest and penalty by 01.08.2021 as per provision of law and response to the intimation the taxpayer has submitted the reply in Form part-B of GST DRC-01A." iv. Show Cause Notice No. 34/2021-22 (File No. 10/ DGGI/ RRU/ INV/ GST/ 2018/ Part-41/ 893-899, dated 13.08.2021 (Annexure-13) was issued by Deputy Director, DGGI, Rourkela Region....
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.... of State Tax or Union Territory Tax as Proper Officer^1 in certain circumstances.- (1) Without prejudice to the provisions of this Act, the Officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the Proper Officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify. (2) Subject to the conditions specified in the notification issued under sub-section (1),- (a) where any Proper Officer issues an order under this Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of State tax or Union territory tax; (b) where a Proper Officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the Proper Officer under this Act on the sa....
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....CT and GST Organisation. However, reading of reply submitted to the Central Proper Officer by the petitioner in connection with the Show Cause Notice dated 13.08.2021 purported to have been issued for initiating proceeding under Section 74 juxtaposed with Order dated 30.01.2025 would demonstrably manifest that the proceeding under said provision of the GST Act was initiated by the Central Proper Officer based on the very same intelligence alleging input tax credit being wrongfully availed and utilised by the petitioner with respect to transactions with M/s. M.G. International and M/s. M.S. Traders during December, 2017, March, 2018 and August, 2018. 7.4. This Court, thus, finds force in the submission of Sri Rudra Prasad Kar, learned Senior Advocate along with Sri Madhab Lal Agarwal, learned Advocate that the petitioner ought not to have been subjected to tax again with respect to very same subject-matter by the Central Proper Officer despite the fact of determination of tax liability being made by the State Proper Officer by initiating proceeding under Section 74 at the earlier point of time was apprised by way of reply in Form GST DRC-06. 7.5. A Letter bearing D.O.F. No. CB....
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....7/2019-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes Customs GST Policy Wing *** Dated: 22nd June, 2020 To The Principal Director General, Directorate General of GST Intelligence, 2nd Floor. Wing-VI, West Block-VIII R.K. Puram, New Delhi-110066 Sir, Subject: Reference form DGGI on Cross empowerment under GST.- reg. I am directed to refer to DGGI letter F.No. 574/CE/66/2020/Inv./15308 dated 26.05.2020 on the issues related to cross empowerment of officers in terms of provisions of Section 6 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "the CGST Act"). 2. Issue raised in the reference is whether intelligence based enforcement actions initiated by the Central Tax Officers against those taxpayers which are assigned to the State Tax administration gets covered under Section 6(1) of the CGST Act and the corresponding provisions of the SGST/UTGST Acts or whether a specific notification is required to be issued for cross empowerment on the same lines as Notification No. 39/2017-CT dated 13.10.2017 authorizin....
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....cross-empowerment under Section 6(1) of the CGST Act is absolute and not conditional. Yours faithfully, (Sumit Bhatia) 22.06.2020 Deputy Commissioner (GST)" 7.7. Conspectus of the above makes it abundantly clear that by virtue of cross-empowerment under Section 6(1) of the GST Act the State Proper Officer and the Central Proper Officer are appointed for all the purpose of the CGST Act and the OGST Act. Taking into consideration the events enumerated above, it is apparent that the exercise of power under Section 74 by the State Proper Officer based on the intelligence received is before the initiation of proceeding by the Central Proper Officer under said provisions on the very same subject-matter. Letter bearing D.O.F. No. CBEC/20/43/01/2017-GST(Pt.), dated 05.10.2018, referred to supra, clarifying the position as to the purport of Section 6(2) of the GST Act, unequivocally indicates that if an Officer of the State Tax Authority initiates intelligence based enforcement action against a taxpayer administratively assigned to Central Tax Authority, the Officers of State Tax Authority would not transfer the said case to its Central Tax counterpart and woul....
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....ing was at earlier point of time by the Central Proper Officer than the Show Cause Notices dated 02.07.2021 and 30.07.2021 issued by the State Proper Officer for the purpose of determination of liability under Section 74 of the said Act, notwithstanding the fact that the Central Proper Officer has issued Show Cause Notice dated 13.08.2021 under Section 74 at a later date. 8.1. Regard may be had to a decision of the Hon'ble Supreme Court of India rendered in the case of Armour Security (India) Ltd. Vrs. Commissioner, CGST, Delhi East Commissionerate and Another, 2025 INSC 982, wherein the purport of use and meaning attached to "proceedings" and "subject-matter" as employed in Section 6 have been discussed threadbare to answer the questions: i. whether issuance of summons can be regarded as 'initiation of proceedings' within the meaning of Section 6(2)(b) of the CGST Act; and ii. whether 'subject-matter' within the meaning of Section 6(2)(b) of the CGST Act includes all matters dealt with in summons under the Act. 8.2. The Hon'ble Supreme Court in the afore-mentioned case came to lay down the following propositions with respect to interpretation of Section 6 o....
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....mmencement of an inquiry or investigation by one authority, another inquiry or investigation on the same subject-matter is initiated by a different authority. a. Where a summons or a show cause notice is issued by either the Central or the State tax authority to an assessee, the assessee is, in the first instance, obliged to comply by appearing and furnishing the requisite response, as the case may be. We say, so because, mere issuance of a summons does not enable either the issuing authority or the recipient to ascertain that proceedings have been initiated. b. Where an assessee becomes aware that the matter being inquired into or investigated is already the subject of an inquiry or investigation by another authority, the assessee shall forthwith inform, in writing, the authority that has initiated the subsequent inquiry or investigation. c. Upon receipt of such intimation from the assessee, the respective tax authorities shall communicate with each other to verify the veracity of the assessee's claim. We say, so as this course of action would obviate needless duplication of proceedings and ensure optimal utilization of the Department's time, effort,....
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....operation with the authorities. It is incumbent upon them to appear in response to a summons and/or reply to a notice. 98. Before parting with this matter, we deem it appropriate to make certain suggestions concerning the common IT infrastructure shared by the Central and State tax authorities. It is imperative that the Departments act in harmony and maintain heightened vigilance with respect to intelligence inputs received by them, so as to give full effect to the legislative intent underlying the GST regime. Such coordination would also serve to mitigate the unnecessary hardship caused to taxpayers by overlapping proceedings and lack of inter-Departmental communication. 99. The DGGI may consider adopting necessary measures to develop a robust mechanism for seamless data and intelligence sharing between the Central and State authorities, including provision for real time visibility to both authorities of any action taken pursuant to an intelligence input, thereby advancing the objectives of harmony and cooperative federalism." 8.3. It is asserted by Sri Madhab Lal Agarwal, learned Advocate supplementing the argument of Sri Rudra Prasad Kar, learned Senior Advo....
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....and application of provisions of Section 6(2) of the GST Act as expounded by the Hon'ble Supreme Court of India in the case of Armour Security (India) Ltd. (supra), the Deputy Director, DGGI, Rourkela Regional Unit (Annexure-13) purporting to determine the liability of the petitioner under Section 74 lacks jurisdiction to issue the Show Cause Notice dated 13.08.2021. 8.6. Since the Show Cause Notice dated 13.08.2021 is held to be not in consonance with the statutory requirement and contrary to what has been explicitly mandated in Section 6 read with interpretation put forth by the Hon'ble Supreme Court of India in Armour Security (India) Ltd. (supra), the Order-in-Original dated 30.01.2025 passed as a resultant effect of such Show Cause Notice cannot be countenanced on the principle "Sublato fundamento cedit opus". 8.7. Meaning of said maxim can be found in Badrinath Vrs. State of Tamil Nadu, (2000) 8 SCC 395, wherein it has been stated succinctly as follows: "This flows from the general principle applicable to "consequential orders". Once the basis of a proceeding is gone, may be at a later point of time by order of a superior authority, any intermediate action take....