2021 (8) TMI 136 - HC - GST

Jurisdiction of state or center - Validity of summons issued by the Senior Intelligence officer - intent of prolonging and protracting the investigation - Scope of Section 6(2)(b) of CGST Act - Section 70 of the Central Goods and Services Tax Act, 2017 - HELD THAT - This Court is of the considered opinion that the writ petitioner has approached this Court on every stage, which would reveal that he is attempting to prolong the proceedings, instead of defending his case by producing documents and evidences and established his case or otherwise. Thus, such a conduct of filing writ petition after writ petition, challenging the summons and proceedings intermittently cannot be appreciated by this Court. Scope of Section 6(2)(b) of CGST Act - HELD THAT - This Court is of the considered opinion that the State authorities issued a notice for intimating discrepancies in the return after scrutiny in proceedings dated 17.12.2020. The said proceedings would reveal that during the scrutiny of the return for the tax period referred certain discrepancies have been noticed. Regarding such discrepancies, the proceedings are initiated and is pending for adjudication - The very purpose and object of Section 6(2) (b) of the Act is to ensure that on the same subject, the parallel proceedings are to be avoided. Once on a particular subject, the State authority has initiated action under the State Goods and Services Tax Act, then alone, the proper answer under the Central Goods and Services Tax Act are restrained to wait till the finalization of the proceedings initiated by the State authorities. However, in all circumstances, and in respect of various other proceedings, the benefit cannot be claimed by the assessees. Mere pendency of proceedings before the State authorities is not a ground to restrain the Central authorities from issuing summons and conduct investigation regarding certain allegations. Therefore, all these factors require an adjudication before the competent authority and if the summons are kept in abeyance at this stage, the same would paralyze the entire proceedings, which is not only desirable, but would cause prejudice to the interest of the Revenue in the present case - the petitioner is at liberty to respond to the summons by producing all relevant documents, evidences, statements, etc., and defend his case in the manner known to law - Petition dismissed.

Summary

Issues:
Challenge to summons issued under Section 70 of the Central Goods and Services Tax Act, 2017 based on the prohibition clause in Section 6(2)(b) of the Act.

Analysis:

Issue 1: Challenge to Summons
The petitioner challenged the summons issued by the Senior Intelligence officer under Section 70 of the Central Goods and Services Tax Act, 2017, arguing that proceedings initiated by the State authorities under the State Goods and Services Tax Act should be concluded before Central authorities can proceed. The petitioner contended that the summons lacked jurisdiction due to ongoing proceedings by the State officials. The Court noted that the summons directed the petitioner to provide evidence and documents related to the company under investigation. The Court opined that challenging the summons at this stage would hinder the investigative process unnecessarily, and the merits of the case should be left for competent authorities to determine based on available records and evidence.

Issue 2: Interpretation of Section 6(2)(b) of the Act
The Court analyzed Section 6(2)(b) of the Act, which prohibits parallel proceedings on the same subject matter by State and Central authorities. It emphasized that the subjects under investigation by both authorities must be the same to invoke this provision. The Court clarified that the burden of proving the similarity of subjects lies with the aggrieved party before the competent authority, not the High Court in a writ proceeding. The Court highlighted that detailed scrutiny of business transactions and tax matters should be left to department officials with expertise in the field. It cautioned against High Court intervention during summons issuance, as it could disrupt the investigative process and hinder the truth-seeking objective of the Statute.

Issue 3: Prolonged Legal Challenges
The Court noted the petitioner's habit of filing multiple writ petitions challenging various summons and orders, which seemed to delay and prolong the investigative process. It expressed disapproval of such conduct, emphasizing the importance of cooperating with authorities and presenting evidence to establish innocence or guilt. The Court highlighted that continuous legal challenges could impede the progress of investigations and prejudice the interests of the Revenue.

Conclusion
The Court dismissed the writ petition, allowing the respondent to proceed with the investigation as per statutory procedures. It directed the petitioner to respond to the summons by providing relevant documents and evidence, while cautioning against unnecessary delays through legal challenges. The judgment underscored the importance of cooperation, adherence to legal processes, and avoiding actions that could obstruct the administration of justice and revenue collection.