2020 (2) TMI 1241 - HC - GST

Jurisdiction - Central GST authority or State GST authority - Validity of investigation initiated by the respondents and the summons issued in connection with the said investigation - primary challenge to the investigation and the summons issued was a specific bar under the GST Act, 2017 - Input Tax Credit on the GST paid on the goods and service purchased - primary contention of the counsel for the petitioner was that once when a show cause notice proceeding initiated by the respondents dated 14.11.2019 is pending before the concerned authorities under the CGSGST, the respondents could not have issued or initiated another investigation or proceeding in-respect of the same subject matter, which otherwise is not permissible under the provisions of Section 6(2)(1)(b). HELD THAT - This Court does not find any substance in the arguments of the petitioner, when they say that the investigation and the proceedings now initiated is one, which hit by Section 6(2)(1)(b) of the CGST Act of 2017. What has also to be appreciated is the fact that there is a clear distinction between a proceeding drawn for the demand of tax evaded by the petitioner-establishment and the investigation be conducted by the Department of the DG, GST Intelligence Wings in respect of an offence committed by an establishment by way of using bogus and fake invoices and illegally availing ITCs, which the petitioner-establishment otherwise was ineligible. Petition dismissed.

Summary

Issues involved:
1. Challenge to investigation and summons under GST Act, 2017.
2. Compliance with relief sought by the petitioner.
3. Allegations against the petitioner regarding fake invoices and tax evasion.
4. Cancellation of registration and subsequent proceedings.
5. Legal validity of investigation under Section 6(2)(1)(b) of CGST Act, 2017.

Comprehensive Analysis:
1. The petitioner challenged an investigation and summons under the GST Act, 2017, citing a specific bar in the Act. The relief sought included quashing the investigation proceedings, providing copies of seized documents, and restraining coercive actions during investigation.
2. The petitioner was willing to face the investigation if relief was granted. The petitioner, a steel trading company, faced allegations of purchasing goods from bogus dealers, leading to blocked Input Tax Credit. Previous legal challenges and cancellation of registration added complexity to the case.
3. The respondents alleged that the petitioner issued fake invoices and evaded taxes worth crores. The investigation revealed ineligible ITC claims of around ?60 crores, with potential for further increase.
4. The respondents argued that the investigation by the Directorate of General of GST Intelligence Wing was necessary due to serious offenses committed by the petitioner, such as defrauding government revenue using fake invoices. The nature of the offense fell under Section 132(1)(i) of the CGST Act, making it a cognizable and non-bailable offense.
5. The court found no merit in the petitioner's argument that the investigation violated Section 6(2)(1)(b) of the CGST Act. It distinguished between tax demand proceedings and investigations into serious offenses like tax evasion through fake invoices. Previous judgments cited by the petitioner were deemed irrelevant to the current case, leading to the rejection of the writ petition.