Petitioner | M/S. Indo International Tobacco Ltd |
Respondent | Shri Vivek Prasad, Additional Director |
Decision by | Delhi High Court |
Date of order or Judgement | 11-January-2022 |
Citation no. | 2022 (1) GSTPanacea 37 HC Delhi W.P.(C) 2420/2021 / W.P.(C) 4036/202 |
Hon’ble Judge | Justice Manmohan, Justice Navin Chawla |
Decision | In Favour of Revenue |
Petitioner | M/S. SSM Exports |
Respondent | Commissioner of Central Excise and Service Tax And CGST Delhi West. & Ors. |
Decision by | Delhi High Court |
Date of order or Judgement | 11-January- 2022 |
Citation no. | 2022 (1) GSTPanacea 37 HC Delhi |
Hon’ble Judge | Justice Manmohan, Justice Navin Chawla |
Decision | In Favour of Revenue |
Multiple Investigation Allowed-No prohibition to transfer under the CGST Act and allowed multiple investigations initiated against the petitioners at the same time by various jurisdictional authorities in order to bring them all under one umbrella.
Multiple Investigation Allowed-Facts of the Case
Multiple Investigation Allowed-M/S. Indo International Tobacco Ltd. and M/S. SSM Exports (“the Petitioners”) are engaged in the manufacturing and supply of tobacco products. These writ petitions have been filed, being aggrieved of multiple search operations, summons being issued and cancellation of GST registration by the Revenue Department (“the Respondent”) for alleged availment and utilization of inadmissible Input Tax Credit (“ITC”) and to challenge the conduct of alleged parallel investigation by officers of CGST, Directorate General of Goods and Services Tax Intelligence Ahmedabad and Delhi Unit, Joint Commissioner , CGST etc.
The Petitioner contended that issuance of such multiple summons by multiple agencies is violative of the mandate of Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 and as also the Circular No. D.O.F. No. CBEC/20/43/01/2017-GST (Pt.) dated October 5, 2018 clarifying initiation of intelligence based enforcement action.
Arguments Before Court
Multiple Investigation Allowed-Petitioner’s Contention
The Petitioner submits that issuance of such multiple summons to the petitioner(s) by multiple agencies is violative of the mandate of Section 6(2)(b) of the CGST Act and as also the Circular dated 05.10.2018 issued by the CBEC.
The jurisdictional Commissionerate(s) of the petitioners, being situated at Gautam Buddh Nagar and South Delhi, respectively, having initiated proceedings against the petitioners, no other Officer of the CGST has jurisdiction to proceed against the petitioners.
Only the jurisdictional Commissionerate that has the jurisdiction to carry out the entire process of investigation, including the issuance of Show Cause Notices, adjudications, recovery, et cetera.
In this regard, they place reliance on the judgment/order of the High Court of Gujarat, in Bhawani Textiles v. Additional Director General, 2020 (35) G.S.T.L. 36 (Guj.); and judgment/order dated 27.12.2019, titled Sureshbhai Gadhecha Proprietor of M/s Anmol Traders v. State of Gujarat, passed in R/Special Civil Application No. 23279 of 2019.
They submit that the Circular dated 05.10.2018, having been issued under Section 168 of the CGST Act, is binding on the Department.
He submits that the Officers appointed by the State Government are also „proper officers‟ for the purpose of the CGST Act and, therefore, exercise all powers under the CGST Act as well.
He submits that Section 6(2) of the CGST Act makes it clear that if the SGST Officer of the State Government has already initiated proceedings, then the CGST Officers cannot exercise any power on the same subject matter, which is intelligence-based enforcement action on the entire taxpayers‟ base irrespective of the administrative assignment of the taxpayer to any authority, and to the entire value-chain of the particular taxpayer.
He submits that in view of Section 6(2)(b) of the CGST Act and the Circular dated 05.10.2018, it would only be the Gautam Buddh Nagar Commissionerate who would be empowered to complete the entire process of investigation, issuance of Show Cause Notice, adjudication, recovery, filing of the appeal, et cetera
Multiple Investigation Allowed-Respondent’s Argument
He submits that Section 6 of the CGST Act carries forward the same intention, with the „proper officer‟ issuing an order under one Act being empowered to issue an order under the other Act as well.
He submits that the all-India jurisdiction can be exercised only by a “proper officer‟ appointed as a Central Tax Officer under Notification No. 14 of 2017 and no one else.
He submits that, therefore, once the proceedings have a PAN India influence and involvement of more than one Commissionerate, it is only the Central Tax Officers having all-India jurisdiction, in terms of the Notification No. 14 of 2017, who are empowered to carry out the investigation.
He submits that in the present case there appears to be a fake Input Tax Credit (hereinafter referred to as the „ITC‟) scam perpetuated by various entities spread across the country and involves the misuse of ITC of more than ₹300 crore. The same required a thorough investigation by a specialised investigating agency having all-India jurisdiction.
As multiple agencies had conducted search operations at the premises of the petitioner, the DGGI, AZU, vide letter dated 01.03.2021, had requested all the concerned formations of the DGGI to transfer the investigation to the DGGI, AZU.
In response to the said request, the investigation being carried out by different CGST formations have been transferred to the DGGI, AZU.
He submits that insofar as the issue of refund and freezing of the bank accounts is concerned, the CGST, Gautam Buddh Nagar Commissionerate, shall continue with the said proceedings.
the DGGI, AZU, had received intelligence that certain entities based in Delhi-NCR region of Domestic Tariff Area had shown supply of low-value tobacco and tobacco-related products to certain Special Economic Zone Units in Kandla Special Economic Zone at highly overvalued rates so as to avail ineligible refund of the ITC.
The grievances of the petitioners that multiple agencies have carried out search operations and are carrying out investigation against the petitioners now stand addressed with the centralisation of investigation with DGGI, AZU, and the petitioners cannot have any grievance to the same.
Delhi High Court Held
Multiple Investigation Allowed-The Hon’ble Delhi High Court noted that, the CBIC vide Notification No. 14/2017 – Central Tax dated July 01, 2017 has appointed the Officers in the DGGI, Director General of Goods and Service Tax (“DGGST”), and Director General of Audit (“DG Audit”) as the Central Tax Officers and conferred on them the powers extended throughout the territory of India, and who are empowered to exercise all-India jurisdiction and those who enjoy the limited territorial jurisdiction.
Observed that, to achieve the goal of harmonized goods and services tax structure and in the spirit of co-operative federalism, Section 6(1) of the CGST Act and pari materia provisions in the State Goods and Services Tax Act, 2017 (“the SGST Act”) provide for cross-empowerment of the Central Tax Officers and the State Tax Officers.
Further noted that, Section 6 of the CGST Act is clearly guided by the object of providing a common national market of goods and services and to eliminate the subjection of the taxpayers to multiple jurisdictions. It aims to provide protection to the taxpayers against being subjected to multiple agencies for the same set of transactions, at the same time empowering the Officers under the CGST Act or the SGST Act or the Union Territory Goods and Services Tax Act, 2017 to pass a comprehensive order and take action, keeping in view and extending to the other Acts. There should, therefore, be only one order insofar as the tax entity is concerned.
Observed that, the investigations were initiated by various jurisdictional authorities against the Petitioners that were allegedly found in the investigations and the same have been transferred to officials of the Respondent to be brought under one umbrella.
Stated that, in the course of investigating of a tax entity, a situation may arise where the investigation may have to be carried out from entities which are not within the territorial jurisdiction of the officer appointed or with the limited territorial jurisdiction. It cannot be said that in every such case, the ‘proper officer’ having limited territorial jurisdiction must transfer the investigation to the ‘proper officer’ having pan India jurisdiction.
It would depend on the facts of each case as to whether such transfer is warranted or not. To lay down the undefeatable rule in this regard may not be feasible or advisable, and certainly not acceptable. Opined that, neither Section 6 of the CGST Act nor the Circular is intended to nor can be given an overarching effect to cover all the situations that may arise in the implementation of the CGST Act and the SGST Act.
Held that, the Circular cannot be extended to cover all and myriad situations that may arise in the administration and the functioning of the GST structure, and 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, to bring harmony between the Centre and the State in the implementation of the GST regime, with the two not hustle 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.
Further held that, there is no prohibition to such transfer under the CGST Act and allowed multiple investigations initiated against the Petitioners at the same time by various jurisdictional authorities to be transferred to DGGI, Ahmedabad, in order to bring them all under one umbrella.
In view of the above, we find no merit in the present writ petitions. The same are accordingly dismissed. There shall be no order as to costs.
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INDO INTERNATIONAL TOBACCO LTD SSM EXPORTS
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