2024 (10) TMI 1119 - HC - GST

Initiation of proceedings under Section 74 by the State Authority - jusriction of State Authority to initiate proccedings when proceedings have already been initiated by the Central Authority - interpretation of term initiation of any proceedings - HELD THAT - Sub-section (2) of Section 6 indicates that, where a proper officer under the CGST Act has issued an order under the provisions of the said Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act as the case may be under the intimation to the jurisdictional officer of the State Tax or the Union Territory Tax Authority as the case may be. The Section further provides that where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under the CGST Act on the same subject matter. The term 'initiation of any proceedings' is no doubt a reference to the issuance of a notice under the provisions of the CGST/SGST Acts and the initiation of an enquiry or the issuance of summons under Section 70 of the CGST/SGST Acts cannot be deemed to be initiation of proceedings for the purpose of Section 6 (2) (b) of the CGST/SGST Acts. The judgment of the Patna High Court in Baibhaw Construction on which considerable reliance was placed by the learned counsel for the petitioners do not appear to have considered the question as to whether the term 'initiation of proceedings' in Section 6 (2) (b) of the CGST/SGST Acts would include any notice issued for any enquiry or any summons issued for the purposes of completing such enquiry either by the Central Authority or by the State Authority. Therefore the judgment of the Patna High Court in Baibhaw Construction does not come to the aid of the petitioners. There are no merit in these writ petitions - petition dismissed.

Issues Involved:

1. Whether the State Authority can initiate proceedings under Section 74 of the CGST/SGST Acts when proceedings have already been initiated by the Central Authority.
2. Interpretation of "initiation of proceedings" under Section 6 of the CGST/SGST Acts.
3. Applicability of previous judgments and circulars to the present case.

Detailed Analysis:

1. Authority to Initiate Proceedings:

The core issue in these writ petitions is whether the State Authority can initiate proceedings under Section 74 of the CGST/SGST Acts when the Central Authority had already initiated an enquiry regarding non-payment of GST. The petitioners argued that as per Section 6 of the CGST/SGST Acts, once proceedings are initiated by one authority, they must be continued and concluded by that authority. The petitioners contended that since the Central Authority initiated proceedings in 2018, the State Authority's subsequent initiation of proceedings under Section 74 was unsustainable.

The court, however, found that the petitioners are not entitled to any relief. It concluded that the initiation of proceedings, as referred to in Section 6, is specifically linked to the issuance of a notice, not merely the initiation of an enquiry or issuance of summons under Section 70. Therefore, the State Authority's initiation of proceedings under Section 74 was valid.

2. Interpretation of "Initiation of Proceedings":

The petitioners argued that the term "initiation of proceedings" should include any enquiry or summons issued by the Central Authority. They relied on various judgments, including those from the Patna, Gujarat, and Jharkhand High Courts, to support their contention that the subject matter of the proceedings initiated by both authorities was the same.

The court, however, agreed with the interpretation from the Allahabad High Court in G.K Trading Company, which held that the term "initiation of proceedings" refers to the issuance of a notice and not the commencement of an enquiry or the issuance of summons. The court emphasized that the word "inquiry" under Section 70 is not synonymous with "proceedings" as used in Section 6 (2) (b) of the CGST/SGST Acts.

3. Applicability of Previous Judgments and Circulars:

The court examined several judgments cited by the petitioners, including those from the Patna and Gujarat High Courts. It found that these judgments did not specifically address whether the term "initiation of proceedings" in Section 6 (2) (b) includes notices issued for enquiry or summons. The court also reviewed a circular dated 05-10-2018, which suggested that proceedings initiated by one authority should be concluded by that authority. However, the court determined that the circular did not align with the statutory provisions of Section 6 (2) (b), as clarified by the Allahabad High Court.

Ultimately, the court dismissed the writ petitions, upholding the view that the State Authority's initiation of proceedings under Section 74 was valid. The court left open the question of whether the proceedings should have been initiated and continued under Section 74, allowing the petitioners to raise objections before the authorities. The court also provided a directive for the timely filing and consideration of appeals by the petitioners.

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