2023 (6) TMI 626 - HC - GST

Parallel proceedings - Requirement to pay 20% of the disputed tax within a time frame for being entitled to interim protection from recovery - whether the State and the Central Authorities can proceed parallely with regard to the same set of facts and what would be the effect of Section 6(2)(b) the West Bengal Goods and Services Tax Act, 2017 which states that where a proper officer under the Central Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under the WBGST Act on the same subject matter? HELD THAT - Admittedly, in the instant case the DGGI, Kolkata Zonal Unit conducted searches and commenced the investigation as on 13.11.2018. It may be true that show cause notice was issued by the State Authority on 30th September, 2022 but the show cause notice issued by the Central Authority preceded the said show cause notice. Therefore, the assessee had filed a rectification application pointing out this fact and requesting that since the Central Authority has already issued the show cause notice dated 30th September, 2022, before the notice dated 30th November, 2022 issued by the State Authority, requested to drop the proceedings. The said request for rectification was rejected. Admittedly, the investigation/proceedings commenced by the Central Authority is more comprehensive as it covers several other parties as well and the said party has been subject matter of issue with regard to the proceedings initiated by the State Authorities. Therefore, the question would be as to whether the State Authority can be permitted to proceed further. The recovery proceedings should remain stayed without imposing any pre-condition. Accordingly, the authorities are restrained from initiating any coercive steps for recovery till the disposal of the writ petition. Consequently, the condition imposed by the learned Single Bench directing deposit of 20% of the disputed tax is set aside. The time for filing affidavit-inopposition by the respondent is extended by three weeks from date, reply, if any, be filed within two weeks thereafter - petition disposed off.

Summary

Issues involved:
The judgment involves issues of payment of disputed tax for interim protection, the authority to proceed with parallel proceedings by State and Central Authorities, and the binding effect of a decision by the High Court of Bombay on West Bengal State Tax Authorities.

Issue 1: Payment of disputed tax for interim protection
The writ petitioners appealed against an order requiring them to pay 20% of the disputed tax for interim protection. The question arose whether this condition could be imposed after already paying 10% of the disputed tax while appealing. The Act allows appealing to the Tribunal after the first appellate authority's decision, necessitating the writ petition.

Issue 2: Parallel proceedings by State and Central Authorities
The main issue was whether State and Central Authorities can proceed simultaneously on the same subject matter. Section 6(2)(b) of the West Bengal Goods and Services Tax Act, 2017 prohibits parallel proceedings. The Central Authority initiated proceedings before the State Authority, leading to a request for dropping State proceedings. The Central investigation was more comprehensive, covering multiple parties, raising doubts on the State's authority to proceed.

Issue 3: Binding effect of High Court of Bombay's decision
The appellants relied on a High Court of Bombay decision regarding GST Appellate Tribunal formation and limitation extension. The State argued that this decision does not bind West Bengal State Tax Authorities. The judgment concluded that recovery proceedings should be stayed without pre-conditions until the writ petition's disposal, setting aside the 20% disputed tax deposit requirement.

Conclusion:
The High Court of Calcutta ruled in favor of the writ petitioners, setting aside the requirement to pay 20% of the disputed tax for interim protection. Recovery proceedings were stayed without imposing pre-conditions until the writ petition's disposal. The State was given an extended time to file an affidavit-in-opposition, with a subsequent reply period. The writ petition was disposed of with these observations.