Indo International Tobacco Limited VS Additional Director General Directorate General of Goods and Service Tax Intelligence

The two writ petitions, W.P.(C) 2420 of 2021 and W.P.(C) 4036 of 2021, involve a common legal question, both of which arise from a circular issued by the Central Board of Excise and Customs (CBEC) under D.O. F. No. CBEC/20/43/01/2017-GST (Pt.), dated October 5, 2018. Due to the similarity in the legal issue presented in both cases, they are being addressed and resolved together in a single judgment.

The two writ petitions, W.P.(C) 2420 of 2021 and W.P.(C) 4036 of 2021, involve a common legal question based on a Circular issued by the Central Board of Excise and Customs (CBEC) on October 5, 2018. These petitions are thus considered together and decided by a common judgment.

In W.P.(C) 2420 of 2021, the petitioner, a manufacturer and supplier of tobacco products, obtained GST registration on October 21, 2019, from the jurisdictional office in Gautam Buddh Nagar, Uttar Pradesh, as the firm’s principal place of business was located within this jurisdiction. The petitioner began its commercial operations in December 2019.

On March 19, 2020, the CGST Officers from Gautam Buddh Nagar conducted a search at the petitioner’s premises. The petitioner claims that no discrepancies were found during this search. However, on April 20, 2020, the Assistant Commissioner of Central Tax, Division-I, Gautam Buddh Nagar, issued a Show Cause Notice to the petitioner. The notice required the petitioner to explain why its refund claim for February 2020, filed under Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act), should not be rejected. The notice also demanded the recovery of an allegedly inadmissible credit amounting to ₹18,26,78,282.

Further, on May 11, 2020, the Assistant Commissioner issued an order under Section 83 of the CGST Act, instructing ICICI Bank, where the petitioner held an account, to provide the petitioner’s KYC documents and account details.

The two writ petitions, W.P.(C) 2420 of 2021 and W.P.(C) 4036 of 2021, raise similar legal questions and revolve around a circular issued by the Central Board of Excise and Customs (CBEC) on 05.10.2018. These petitions are therefore considered and resolved through a common judgment.

The petitioner, engaged in manufacturing and supplying tobacco products, obtained GST registration on 21.10.2019 from the Gautam Buddh Nagar office in Uttar Pradesh. The petitioner began commercial operations in December 2019. On 19.03.2020, CGST officers conducted a search at the petitioner’s premises, reportedly finding no issues. However, on 20.04.2020, the Assistant Commissioner, Central Tax Division-I, Gautam Buddh Nagar, issued a Show Cause Notice regarding the rejection of the petitioner’s refund claim for February 2020 under Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act), seeking to recover ₹18.26 crore of allegedly inadmissible credit.

Following this, on 11.05.2020, the Assistant Commissioner ordered ICICI Bank to provide the petitioner’s KYC documents and transaction details, and provisionally attached the petitioner’s bank account. On 05.06.2020, a summons under Section 70 of the CGST Act was issued to the petitioner to produce various documents.

Despite multiple representations, the petitioner’s refund remained unreleased, and the bank account stayed attached, leading to the filing of two writ petitions (Civil Writ Petition Nos. 461 and 462 of 2020) before the Allahabad High Court. Notices were issued in these petitions, but while they were pending, another search was conducted on 07.10.2020 by CGST officers. Additional summons were issued on 24.11.2020.

Subsequently, on 01.12.2020, the Directorate General of Goods & Services Tax Intelligence (DGGI), Kanpur Regional Office, conducted another search, authorized by the Joint Director, DGGI, Lucknow. On 14.01.2021, the DGGI, Delhi Zone Unit, also conducted a search at the petitioner’s premises.

The petitions and the recurring actions of the authorities highlight the ongoing disputes regarding the petitioner’s GST operations, refund claims, and the legal process related to these issues.

The two writ petitions, W.P.(C) 2420 of 2021 and W.P.(C) 4036 of 2021, involve common legal questions and stem from a circular issued by the Central Board of Excise and Customs (CBEC) on October 5, 2018. Consequently, both petitions are addressed and resolved through a single judgment.

The petitioner in W.P.(C) 2420 of 2021 is involved in manufacturing and supplying tobacco products and obtained GST registration on October 21, 2019, under the jurisdiction of Gautam Buddh Nagar, Uttar Pradesh. The petitioner’s commercial operations began in December 2019. However, on March 19, 2020, the CGST Officers from Gautam Buddh Nagar conducted a search of the petitioner’s premises. The petitioner asserts that no irregularities were found during this search.

Subsequently, on April 20, 2020, the Assistant Commissioner, Central Tax Division-I, issued a Show Cause Notice to the petitioner regarding the rejection of a refund claim for February 2020 and the recovery of an alleged inadmissible credit totaling ₹18,26,78,282 under Section 54 of the Central Goods and Services Tax Act, 2017 (CGST Act). Additionally, on May 11, 2020, the Assistant Commissioner ordered the provisional attachment of the petitioner’s bank account with ICICI Bank, directing that no debits be made without prior departmental approval.

Further, on June 5, 2020, the petitioner was issued a summons under Section 70 of the CGST Act, requiring the production of various documents. Despite multiple representations, the petitioner’s refund was not released, and the bank account remained attached. As a result, the petitioner filed two writ petitions, Civil Writ Petition Nos. 461 and 462 of 2020, before the Allahabad High Court, which issued notices and directed the completion of pleadings.

While these petitions were pending, another search was conducted by CGST officers at the petitioner’s premises on October 7, 2020. Following this, further summonses were issued on November 24, 2020, December 1, 2020, and February 1, 2021, by various regional units of the Directorate General of Goods & Services Tax Intelligence (DGGI) and the CGST Commissionerate, leading to multiple searches across different locations including Kanpur, Delhi, Ghaziabad, and Ahmedabad.

Aggrieved by these repeated searches and summonses, the petitioner filed the present writ petition.

In W.P.(C) 4036 of 2021, the petitioner operates a proprietorship firm engaged in manufacturing flavoring compounds and flavored tobacco products under various brand names. The firm is registered with the GST Department, South Delhi Commissionerate.

On September 4, 2019, officers from the Anti-Evasion unit of CGST, Delhi East and South Commissionerate, conducted a search at the petitioner’s premises. The search warrant was issued by the Joint Commissioner (AE), CGST, Delhi East Commissionerate.

Both writ petitions challenge the actions taken by the CGST and DGGI authorities, including multiple searches and summonses, and seek relief from the alleged harassment and procedural violations. The common judgment considers the legality and propriety of these actions under the CGST Act.

The petitioners argue that the issuance of multiple summonses by various agencies violates Section 6(2)(b) of the Central Goods and Services Tax (CGST) Act and the Circular dated 05.10.2018 issued by the Central Board of Excise and Customs (CBEC). They contend that since their jurisdictional Commissionerates are located in Gautam Buddh Nagar and South Delhi, respectively, no other CGST officer has the authority to initiate or continue proceedings against them. According to the petitioners, only the jurisdictional Commissionerate has the power to conduct the full investigation process, including issuing Show Cause Notices, adjudicating matters, and recovering dues.

In support of their argument, the petitioners cite the Gujarat High Court’s judgment in *Bhawani Textiles v. Additional Director General*, 2020 (35) G.S.T.L. 36 (Guj.), and the order dated 27.12.2019 in *Sureshbhai Gadhecha Proprietor of M/s Anmol Traders v. State of Gujarat* (R/Special Civil Application No. 23279 of 2019). They emphasize that the Circular dated 05.10.2018, issued under Section 168 of the CGST Act, is binding on the Department and reinforces their position that only the jurisdictional Commissionerate has the authority to handle the investigation and related proceedings.

The petitioners also rely on various judgments to support their submission that the Circular must be adhered to by the Department.

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