CGST Preventive Wing And DGGI Wing To Forward All Investigation And Inter-Related Transaction To State Authorities: Jharkhand High Court

The Jharkhand High Court has opined that 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 transactions to the State Authorities, who shall continue with the proceedings from the same stage.

The bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan has stated that “we failed to understand as to what had become so emergent that prior to any determination or finding of any irregular/inadmissible/wrong availment of Input Tax Credit, the bank account had to be attached, which appears to be an 'arm twisting method' to make the petitioner succumb to the particular authority, which cannot be the dictum of the Act and we deprecate the same.”

The Petitioner is the proprietor of M/s. Manish Trading Company, Lalgutwa, Ranchi, and is carrying on the business of trading of Iron & Steels and Cements, since 2017-18. As per the averments made in the writ petition, the purchases and sales are duly reflected in the GST returns furnished by the Petitioner and the outward tax liability is adjusted against the Input Tax Credit available to the Petitioner.

An inspection was carried out by the Intelligence Bureau of the State Goods & Service Tax, and GST INS-01 was issued and after the inspection was concluded, the GST Officers fixed the date for furnishing books of accounts. As per the Petitioner, an amount of Rs.34.00 lakhs from the Cash ledger of the Petitioner and Rs.06.00 lakhs from the proprietorship firm of his wife were made to deposit.

While the proceedings had been initiated by the State Goods & Services Tax Department, the Petitioner was served with a notice by the Preventive Branch of Central Goods & Services Tax, Ranchi with a direction to reverse the Input Tax Credit along with interest and penalty on account of alleged purchases from the non-existent entity.

While two departments were in seisin of the proceedings, a search was carried out by the DGGI, Intelligence Branch of CGST and various seizures were made and a Panchnama was also drawn to that effect. Following the earlier notices of the Preventive Branch dated 10.04.2023, various notices were issued from time to time including Summons by the Preventive Wing. Simultaneously after the search was carried out by the DGGI Unit, simultaneous Summons were issued

The petitioner contended that the petitioner having suo-moto deposited an amount of Rs. 40.00 lakhs and having reversed an amount of Rs. 3.42 crores, clearly goes on to suggest that the petitioner is not flying by the night assessee and has been discharging his statutory obligations under the Act. The attachment of Bank Accounts is bad in law, since the same suffers from the vices of excessive jurisdiction, inasmuch as, till date, there is no determination of any liability whatsoever and the petitioner is not in a position to understand as to whom he has to furnish documents or give a statement, inasmuch as, the petitioner cannot be made to succumb to the jurisdiction of all the three departments and as such, the attachment also is bad in law.

The department tried to distinguish the initiation of proceedings by the State Authorities and the proceedings before the DGGI and much has been said by the DGGI upon bursting of gangs at Noida operating in issuance of fake bills, without supply of goods. The proceedings by the State GST Officers do not overlap with that of the proceedings by the CGST or the DGGI.

The court states that the State Authorities have also initiated the same very proceeding for wrong/illegal availment of Input Tax Credit. Undeniably, the proceedings at the instance of State Authorities or the Preventive Wing or the DGGI is at initial stage and the proceedings on the basis of 'Search & Seizure' by the State Authorities, is prior in point of time. Hence, Section 6(2)(b) read with clarification dated 05.10.2018, adds to the issues raised by the petitioner and clearly crystalizes that since all the proceedings are interrelated, the State Authorities should continue with the proceedings.

The court directed the Principal Commissioner, Central Goods & Service Tax and Central Excise and Senior Intelligence Officer, Directorate General of GST Intelligence to make over the entire investigations carried till date to the Joint Commissioner of State Taxes, who shall carry out further proceedings against the petitioner in accordance with law.

Counsel For Petitioner: Nitin Kr. Pasari

Counsel For Respondent: Sachin Kumar

Case Title: Vivek Narsaria Versus The State of Jharkhand

LL Citation: 2024 LiveLaw (Jha) 19

Case No.: W.P(T) NO. 4491 of 2023

Click Here To Read The Order