2020 (7) TMI 26 - HC - GST

Wrongful availment of ITC - Section 67 of CGST Act - HELD THAT - Keeping in view the serious allegations that have been levelled against the petitioner by the officers of DGGI as well as by the Commissioner of CGST, Delhi (East), this Court is of the view that ends of justice would be met if the DGGI is directed to conclude the investigation in the present case within a period of three months. The present writ petition is disposed of with a direction to DGGI to conclude the investigation within three months.

Summary

Issues:
Challenge to impugned order dated 03rd June, 2020 keeping provisional attachment orders alive; Jurisdiction of provisional attachment order under Section 83 of CGST Act, 2017; Investigation by DGGI and cooperation of petitioner; Allegations of wrongful availment of ITC by the petitioner; Non-compliance with summons by Directors; Conclusion of investigation within three months by DGGI.

Impugned Order Challenge:
The petitioner challenged the impugned order dated 03rd June, 2020, which kept provisional attachment orders alive. The order specified that the reason for attachment was pending proceedings under Section 67 of the Central Goods and Service Tax Act. However, it was acknowledged that parallel investigation should not be conducted, and the Directorate General of Goods and Services Tax Intelligence (DGGI) took over the investigation from respondent No.1. The order highlighted suspicions of fake ITC passed on by non-existent suppliers to the petitioner.

Jurisdiction of Provisional Attachment:
The provisional attachment of the company's bank accounts on 05.03.2020 under Section 83 of the CGST Act aimed to safeguard government revenue due to fraudulent ITC availed by the company based on fake invoices. The company failed to submit relevant documents to establish the genuineness of the ITC and did not cooperate with the investigation. The investigation revealed the company's intent to evade tax obligations and hide operations.

Investigation by DGGI and Cooperation:
The petitioner argued that no attachment or freezing order had been passed against them by the DGGI despite ongoing investigations since December 2018. The Court directed the DGGI to conclude the investigation within three months and emphasized the petitioner's cooperation in the process.

Allegations of Wrongful ITC Availment:
Both the DGGI and the Commissioner of CGST, Delhi (East) alleged wrongful availment of ITC by the petitioner. The DGGI issued multiple summons to the petitioner's Director, who failed to comply and furnish requested documents. The petitioner submitted documents in three tempos to the DGGI in response.

Non-Compliance with Summons by Directors:
The petitioner's Directors failed to comply with issued summons, contributing to the suspicion of wrongful ITC availment. Lack of evidence regarding the genuineness of ITC availed and non-maintenance of transaction records further raised concerns.

Conclusion of Investigation by DGGI:
The Court directed the DGGI to conclude the investigation within three months, emphasizing cooperation from the petitioner and its Directors. If the DGGI is satisfied, the proceedings will be closed; otherwise, an appropriate show cause notice will be issued. All parties' rights and contentions are preserved for future proceedings.