Consolidation of GST actions started by several bodies is permitted by Delhi High Court
Fact and issue of the case
The petitioner has filed the present petition being aggrieved by multiple investigations being conducted by the different authorities in respect of the supply of goods received and made by the petitioner during the period of July, 2017 to March, 2022.
2The petitioner states that the investigations for the relevant periods were commenced by respondent no.3, CGST Commissionerate, Delhi North (the Jurisdictional Commissionerate) and summons dated 03.03.2022 was issued to the petitioner. The petitioner states that his statement was recorded on 16.03.2022 and that he had submitted all the relevant documents in his possession. The petitioner also claims that the officers of the Jurisdictional Commissionerate collected an amount of ₹50,12,000/-, purportedly under Section 74 of the Central Goods & Services Tax Act, 2017 (hereafter ‘the Act’), without issuing any show cause notice to him.
The petitioner claims that thereafter on 18.04.2022, the officers of respondents no.4 and 5 (Directorate General of GST Intelligence, Gurugram – hereafter ‘the DGGI’) conducted a search in the petitioner’s principal places of business, his residence, and the godown. The petitioner’s business premises and the godown were sealed by the said officers after conducting a search. Thereafter, the concerned officer of the DGGI issued a summon to the petitioner seeking certain documents. The petitioner claims that he made representations informing the concerned officers of the DGGI regarding the proceedings commenced by respondent no.3 and calling upon them to de-seal the premises and refrain from any further proceedings, as parallel proceedings were impermissible.
It is the petitioner’s grievance that despite the same, respondents no.5 has repeatedly issued summons and has not refrained from continuing with the investigation.
During the course of the proceedings the learned counsel appearing for the petitioner and the DGGI requested the Court to fix a date and time when the petitioner would be present both in the business premises as well as the godown for de-sealing the said premises and conducting the search. Accordingly, this Court directed the petitioner to be present at his business premises situated at 2105-B, Ground Floor, Bawana Road, Narela, North-Delhi, Delhi-110040 on 06.06.2022 at 11:00 AM and to be present at the godown located at Ground Floor, Plot No.72/20, 21, Bawana Road, Gali No.2, Prem Colony, Narela, Delhi-110040 on 07.06.2022 at 11:00 AM. The petitioner’s advocate was also permitted to be present at the aforementioned premises.
Pursuant to the said order, the officers of the DGGI de-sealed the premises in question and conducted a search. It is stated on behalf of the DGGI that stocks were recovered from the petitioner’s business premises as well as the godown of M/s Balaji Trading Company, a proprietary concern of the petitioner’s brother.
It is submitted on behalf of the DGGI that neither the petitioner nor his brother could provide any documents regarding the payment of taxes in respect of the goods found during the search conducted in the aforementioned premises. Thus, the same were considered as unaccounted goods and were seized under Section 67(2) of the Act.
It is contended on behalf of respondent no.3 as well as respondent nos. 4 & 5 that the investigations being conducted by the two Commissionerate (the Jurisdictional Commissionerate and the DGGI) are separate investigations pursuant to the intelligence developed by them. It is contended that there is no bar for them to conduct the said investigations as the substratum of their respective investigations is not identical.
Observation of the court
The issues canvassed on behalf of the petitioner is no longer res integra. In Indo International Tobacco Ltd. v. Vivek Prasad and Ors.: 2022 SCC OnLine Del 90, a Co-ordinate Bench of this Court had considered a contention similar to that advanced on behalf of the petitioner and rejected the same. The relevant extract of the same is set out below:
As noted hereinabove, it is on the basis of the above Circular that the learned senior counsel for the petitioner has vehemently submitted that as the ‘intelligence-based enforcement action’ has been initiated by the Officer of the State Tax Authorities, they are to complete the entire process of investigation and take it to its logical conclusion without transferring the same to the Central Tax Officer.
A bare reading of Section 6 of the CGST and the abovementioned Circular, on first blush, supports the interpretation put forth by the learned senior counsel for the petitioners. However, in our opinion, neither Section 6 of the CGST Act nor the Circular dated 05.10.2018 is intended to nor can be given an overarching effect to cover all the situations that may arise in the implementation of the CGST and the SGST Acts. The Circular cannot be extended to cover all and myriad situations that may arise in the administration and the functioning of the GST structure, now being governed by the CGST Act; the SGST Act; the UTGST Act; and the IGST Act. Section 6 of the CGST Act and the above said Circular clearly has a limited application, which is of ensuring that there is no overlapping exercise of jurisdiction by the Central and the State Tax Officers. It is to bring harmony between the Centre and the State in the implementation of the GST regime, with the two not jostling for jurisdiction over a taxpayer. It is, however, not intended to answer a situation where due to complexity or vastness of the inquiry or proceedings or involvement of number of taxpayers or otherwise, one authority willingly cedes jurisdiction to the other which also has jurisdiction over such inquiry/proceedings/taxpayers.
Neither Section 6 of the CGST Act nor the SGST Act nor the Circular dated 05.10.2018, therefore, apply to the fact situation presented by the two petitions before us as they do not operate and are not intended to operate in a situation where the ‘intelligence based enforcement action’ has repercussion or involvement of taxpayers beyond the territorial jurisdictional limit of the officer initiating such an action. It also does not address a situating where two or more Officers, may be Central or State or only Central or State, initiate separate ‘intelligence based enforcement action’ but having a common thread or involvement of multiple taxpayers, like a case of conspiracy. In the first case, the officer initiating the ‘intelligence based enforcement action’ cannot travel beyond his territorial jurisdiction. To strictly enforce Section 6 and the abovementioned Circular would therefore, lead to compelling such officer to restrict his investigation and findings and resultant action only to the taxpayer within his territorial jurisdiction, thereby leading to an incomplete and inconclusive investigation/action. In the abovementioned second scenario, as all officers who have initiated ‘intelligence based enforcement action’ are otherwise having jurisdiction over the taxpayer, strictly enforcing the mandate of Section 6 and the abovementioned Circular, will on the one hand subject the taxpayer to multiple action(s) (which is completely contrary to the intent of the Act as noted hereinabove), while on the other hand lead to multiple authorities expending their time, energy and resources investigating the same ‘intelligence’ input, maybe even reaching to conflicting findings. It is settled principle of interpretation of statute that the court must adopt construction which will ensure smooth and harmonious working of the statute and eschew the other which will lead to absurdity or give rise to practical inconvenience or friction or confusion in the working of the system. (Refer : State of Punjab v. Ajaib Singh, (1952) 2 SCC 421 : AIR 1953 SC 10; Collector of Customs, Baroda v. Digvijaysinhji Spinning & Weaving Mills Ltd., AIR 1961 SC 1549).”
We are also of the view that the petitioner’s insistence on the authority which should conduct the investigation is unjustified. As noted, at the outset, the petitioner’s grievance was in respect of conduct of parallel proceedings. The said grievance perished with respondent no.3 agreeing to the DGGI continuing the investigation from the stage, as obtaining before it.
The petition is, accordingly, disposed of. All pending applications are also disposed of.
Read the full order from hereAmit-Gupta-Vs-Union-of-India-Ors.-Delhi-High-Court2