2021 (4) TMI 271 - HC - GST

Input Tax Credit - tax dues has not been paid or short paid or refund has been released erroneously or input tax credit has been wrongly availed or utilized as provided under Section 74 of the Odisha Goods and Services Tax Act - HELD THAT - It may be noted that the period of enquiry as far as Central tax authority is concerned is from July, 2017 to September, 2018 whereas Opposite Party No.3 has issued a show cause notice specific for April, 2018 and, therefore, there is also an overlapping of the periods. The Court quashes the show cause notice dated 23rd July, 2019, the impugned order dated 5th November, 2019 including the order dated Nil all passed by Opposite Party No.3 and directs that till the conclusion of the proceedings initiated against the Petitioner by the DGGSTI, no coercive action be taken against the Petitioner by the Opposite Party No.3 - Petition allowed.

Summary

Issues:
1. Challenge to show cause notice and orders under OGST Act by State GST authority.
2. Dispute regarding wrong availment of input tax credit.
3. Interpretation of circular dated 5th October, 2018 issued by CBEC.
4. Coercive action by State GST authority during pendency of proceedings with Central GST authority.

Analysis:
1. The petitioner, engaged in trading of iron and scraps, challenged a show cause notice and orders issued by the State GST authority, alleging non-payment of tax dues under OGST Act. The petitioner contended that proceedings were pending with the Central GST authority, and requested the State authority to keep the proceedings in abeyance until the conclusion of the Central authority's investigation.

2. The State GST authority passed orders under OGST Act related to alleged wrong availment of input tax credit by the petitioner. The petitioner argued that the Central authority was already seized of the matter, as communicated in a circular by CBEC. The State authority claimed unawareness of the Central Government's involvement at the time of initiating proceedings under Section 74.

3. The circular dated 5th October, 2018, issued by CBEC, clarified that in cases of intelligence-based enforcement actions, the initiating authority (Central or State tax) is empowered to complete the entire process without transferring the case to the counterpart authority. The State authorities acknowledged the circular but asserted lack of knowledge about the Central tax authority's involvement in the matter.

4. The Court acknowledged the overlapping periods of investigation by Central and State authorities, quashing the show cause notice and orders by the State GST authority. The Court directed that no coercive action be taken against the petitioner by the State authority until the conclusion of proceedings with the Central GST authority. The petitioner's writ petition was allowed, emphasizing cooperation with the Central GST authorities during the investigation.

This comprehensive summary provides a detailed analysis of the legal judgment, covering all the issues involved and the Court's decision on each aspect of the case.