2025 (3) TMI 170 - HC - GST

Challenge to impugned order - proceedings Versus inquiry - Separate proceedings by the state and central authorities - On the audit concluded (by the state GST) petitioner accepted relevant paragraphs in the report to meet the short payment of tax. - HELD THAT - State revenue had probed by initiating audit. In G.K. Trading Company 2021 (1) TMI 130 - ALLAHABAD HIGH COURT view taken includes audit to be a proceeding. Undisputed fact is the show cause notice issued by Central revenue was after commencement of audit. A summons issued under section 70 means the process of collection of evidence or gathering of material as by interpretation of word investigation given by the Supreme Court in Liberty Oil Mills v. Union of India 1984 (5) TMI 236 - SUPREME COURT with reference to investigation mentioned in provisions of Import and Export Control Act and Imports (Control) Order 1955. There is also no dispute that subject matter of both proceeding are same. Impugned order is quashed - petition allowed.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the order dated 26th April, 2024, passed by the Assistant Commissioner, GST and Central Excise, should be interfered with due to a concluded proceeding in respect of the subject matter initiated by the Central revenue.2. Interpretation of the provisions of the Central Goods and Services Tax Act, 2017, regarding the initiation of proceedings on the same subject matter by the proper officer under the Act.Detailed Analysis:The Court considered the writ petition moved by the petitioner challenging the order dated 26th April, 2024, passed by the Assistant Commissioner, GST and Central Excise. The petitioner argued that there was a concluded proceeding in respect of the subject matter initiated by the Central revenue, which should preclude further proceedings. The State revenue had conducted an audit for the periods 2017-18 and 2018-19, and the petitioner had accepted relevant paragraphs in the audit report to rectify the short payment of tax.The petitioner relied on a judgment of the High Court of Allahabad in G.K. Trading Company v. Union of India, which discussed the interpretation of the words "proceedings" and "inquiry" under the GST Acts. The Court agreed with the interpretation in the G.K. Trading Company case, emphasizing that there should not be overlap in making probes on the same subject matter under the Central Goods and Services Tax Act, 2017.The Court noted that the State revenue had initiated an audit before the show cause notice was issued by the Central revenue. It held that the summons issued under section 70 of the Act was part of the process of collecting evidence or gathering material, akin to an investigation. The Court concluded that since the subject matter of both proceedings was the same, and the audit by the State revenue had already been conducted, the impugned order passed by the Assistant Commissioner was set aside and quashed.Significant Holdings:The Court held that under the provisions of the Central Goods and Services Tax Act, 2017, when a proper officer under the State Act has initiated proceedings on a subject matter, no proceedings shall be initiated by the proper officer under the Central Act on the same subject matter. The Court emphasized that audit should be considered a proceeding, and in this case, the audit conducted by the State revenue precluded further action by the Central revenue on the same subject matter. Therefore, the impugned order was set aside, and the writ petition was allowed and disposed of.In conclusion, the Court's decision was based on the interpretation of the relevant provisions of the GST Acts and the principle that there should not be overlapping probes on the same subject matter. The Court's analysis focused on the sequence of events, the nature of the proceedings conducted by the State revenue, and the application of the law to the facts of the case, leading to the setting aside of the impugned order.