2024 (1) TMI 809 - HC - GST

Jurisdiction and Authority in GST Proceedings - Power of CGST Authority / DGGI over State GST authorities - Attachment of Bank accounts without Determination of Liability - conflict with the notification issued by the CBEC from time to time, concerning guidelines for attachment of Bank Accounts - HELD THAT - Bare perusal of section 6 of the Act, especially Section 6(2)(b), when read with the Clarification dated 05.10.2018, further read with Clarification dated 22.06.2020, when read together, it clearly denotes and implies that it is a chain of a particular event happening under the Act and every any enquiry/investigation carried out at the behest of any of the Department are interrelated. Even if it is accepted that the submission of the Respondent No. 5 that the proceedings initiated by the Respondent No. 5 is on the basis of an information received from Noida; in that event also, it will be at loss to say that the DGGI is raising a question about credibility and competence of the State GST Authorities, in carrying out the investigation concerning wrong/inadmissible availment of Input Tax Credit, inasmuch as, the officers of the DGGI does not enjoy any special power or privilege in comparison with the officers of the State GST Authorities. The Preventive Wing of the CGST and DGGI Wing of the CGST, shall forward all their investigation carried out as against the petitioner and inter-related transaction to the State Authorities, who shall continue with the proceedings from the same stage - the Respondent No. 4 5 to make over the entire investigations carried till date to Respondent No. 3, who shall carry out further proceedings as against the petitioner in accordance with law. Application disposed off.

Summary

Issues Involved:
1. Authority to complete GST investigation.
2. Validity of notices issued by different GST wings.
3. Attachment of bank accounts.

Summary:

1. Authority to Complete GST Investigation:
The petitioner sought a declaration that under Section 6 of the Central Goods and Services Tax Act, 2017, and corresponding state provisions, the authority that initiated the proceedings is empowered to complete the entire process. The petitioner argued that the State Goods and Services Tax (SGST) should complete the investigation initiated by them, not the Central Goods & Services Tax (CGST) or the Directorate General of Goods & Services Tax Intelligence (DGGI). The court clarified that officers of both Central and State tax are authorized to initiate and complete intelligence-based enforcement actions, as per Notification No. 39/2017-Central Tax and Clarifications dated 05.10.2018 and 22.06.2020.

2. Validity of Notices Issued by Different GST Wings:
The petitioner challenged multiple notices from different GST wings, arguing that once the State GST initiated proceedings, further notices from CGST and DGGI were invalid. The court emphasized that Section 6(2)(b) of the CGST Act, read with the clarifications, indicates that the authority which initiates action should complete it. The court found that the State GST had initiated proceedings earlier and should continue the investigation, directing the CGST and DGGI to transfer their investigations to the State GST.

3. Attachment of Bank Accounts:
The petitioner contested the attachment of their bank accounts by the DGGI under Section 83 of the CGST Act, arguing it was premature and excessive. The court observed that the attachment seemed like an "arm twisting method" and was not justified without a determination of liability. The court directed the State GST to take over the investigation and make an immediate decision regarding the de-freezing of the bank accounts.

Conclusion:
The court ruled that the State GST, having initiated the proceedings first, should continue and complete the investigation. The CGST and DGGI were directed to transfer all related investigations to the State GST. The court also ordered the State GST to review the attachment of the petitioner's bank accounts promptly. The writ application was disposed of accordingly.