2023 (8) TMI 1033 - HC - GST

Jurisdiction - legality of parallel proceedings initiated by the Central Tax Officer and the State Tax Officer - petitioner issued with summons by the Central Tax Officer, pursuant to which the petitioner is said to have filed the required documents before the said authority and the State Tax Authority has initiated proceedings on the very same transaction is the contention taken - HELD THAT - There is no prohibition in the State Tax Authority initiating an action where the Central Tax Authority is seized of the matter but, however, on the very same transaction, obviously, only one assessment can be made and it is proper that the authority, who initiated the action first, continues with it and the other authority restrains itself from so proceeding. In the present case, no such difficulty arises. The proceeding initiated by the Central Tax Authority and State Tax Authority are against different assessees. The notice issued, produced at Annexure-1, in both the writ petitions, is under Section 70 of the CGST Act, 2017, which is the power to summon persons to give evidence to produce documents and not for intelligence based enforcement action on the noticee, who is the petitioner herein. The summons requires the petitioner herein to produce documents or things detailed as 1, 2, 3, the last of which being the details of purchases made from one M/s D.S. Bitumix, Kolkata-700001. The action, obviously, initiated by the central authority is against M/s D.S. Bitumix, Kolkata- 700001 and the summons is issued only insofar as the petitioner having dealt with the said assessee. The notice issued to the assessee by the State Tax Authority, as seen from Anenxue-3 dated 18.08.2022 in C.W.J.C No. 3279 of 2023, notices that during the course of investigation conducted by the Central Tax Authority, Kolkata, it was revealed that M/s D.S.Bitumix, Kolkata-700001, a bogus firm was engaged in availment of fake input tax credit and subsequently passing of irregular/inadmissible input tax credit to many entities. The petitioner was one such dealer, who had allegedly purchased material from the said bogus firm. The proceeding initiated by the petitioner is with respect to the input tax credit claimed by the petitioner on the purchases made from the bogus dealer. The investigation, as initiated against the supplier of the petitioner, cannot have any bearing on the action taken by the State Tax Authority against the petitioner for the relevant periods, being distinct from each other and against two separate assessees. Petition dismissed.

Summary

Issues Involved:
The issues involved in this judgment are the challenge to assessment orders under Article 226 of the Constitution of India, parallel proceedings initiated by Central Tax Officer and State Tax Officer, and the jurisdiction of the authorities.

Judgment Details:

Challenge to Assessment Orders:
The petitioner filed writ petitions challenging assessment orders for two different periods. The petitioner's contention was that parallel proceedings by both Central Tax Officer and State Tax Officer cannot be sustained.

Jurisdiction of Authorities:
The Court observed that the question raised was solely on jurisdiction. The petitioner was summoned by the Central Tax Officer and submitted documents. Subsequently, the State Tax Authority initiated proceedings on the same transaction. The petitioner relied on a notification issued by the Central Tax Authority, which restricts the State Tax Authority from initiating proceedings on the same matter.

Notification Clarification:
The notification clarified that both Central and State Tax Authorities can initiate enforcement action on the assessee regardless of administrative assignment. It stated that the authority initiating the action is empowered to complete the investigation process without the need for transfer between authorities.

Prohibition and Proper Assessment:
While there is no prohibition on State Tax Authority initiating action when Central Tax Authority is involved, only one assessment can be made on the same transaction. The authority initiating the action first should continue, and the other should refrain from proceeding.

Preclusion from State Tax Authority:
The judgment cited precludes the State Tax Authority from proceeding when the Central Authorities are already involved in a matter. The petitioner had appeared before the Central Authority, making it improper to approach the State Tax Authorities.

Distinct Proceedings:
In this case, the proceedings by Central Tax Authority and State Tax Authority were against different assessees. The actions were related to different aspects of the same transaction involving M/s D.S. Bitumix, Kolkata-700001.

Dismissal of Writ Petition:
The Court found no reason to entertain the writ petition and dismissed it in limine.