Issuance Of Summons U/S 70 Of CGST Act Doesn't Initiate Proceedings U/S 6(2)(B) Of CGST Act: Kerala High Court

The Bench of Justice Gopinath P. observed that “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.”

Section 70 of the Central Goods and Services Tax Act, 2017 lays down the law regarding the power of the officer to summon any person before them to provide evidence in the form of documents regarding any specific matter.

Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 prohibits separate initiation of proceedings on the same subject-matter by the proper officer under the C.G.S.T. Act when proceeding on the same subject-matter by the proper officer under the State Act has been initiated, whereas Section 70 of the C.G.S.T Act.

In this case, the proper officer under the Central Goods and Services Tax Act, 2017 initiated an inquiry regarding non-payment of GST and directed the production of certain records, followed by summons issued under Section 70 of the CGST Act. Subsequently, the State Authority commenced proceedings under Section 74 read with Section 122(1) of the CGST/SGST Acts.

The assessee/petitioner contended that the proceedings initiated by the State Authority are unsustainable under Section 6 of the CGST/SGST Acts. According to them, once proceedings are initiated by one authority, they must be concluded by that same authority. Since the Central Authority had already initiated proceedings in 2018, including issuing summons and recording statements, the assessee contends that only the Central Authority could have issued a show cause notice under Section 74, not the State Authority.

The department referred to the case of G.K Trading Company v. Union of India and others and submitted that the term 'initiation of proceedings' in Section 6 has to be construed as the commencement of the proceedings by the issuance of notice and any enquiry or summons issued in connection with the enquiry cannot be deemed to be commencement of the proceedings.

The bench, after referring to Section 6(2) of the CGST Act, observed 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.

Disagreeing with the contentions of the assessee, the bench stated “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 bench referred to the case of G.K Trading Company v. Union of India and others [AIRONLINE 2020 ALL 2678] where it was held that “………The word "inquiry" in Section 70 has a special connotation and a specific purpose to summon any person whose attendance may be considered necessary by the proper officer either to give evidence or to produce a document or any other thing. It cannot be intermixed with some statutory steps which may precede or may ensue upon the making of the inquiry or conclusion of inquiry. The process of inquiry under Section 70 is specific and unified by the very purpose for which provisions of Chapter XIV of the Act confers power upon the proper officer to hold inquiry. The word "inquiry" in Section 70 is not synonymous with the word "proceedings", in Section 6(2)(b) of the U.P.G.S.T. Act/ C.G.S.T. Act.”

The bench, after reviewing Circular No. D.O.F No. CBEC/20/43/01/2017 GST (Pt) dated 05-10-2018, observed that the circular indicates that even when an enquiry has been initiated by one authority and summons have been issued by that authority, the entire proceedings under Section 74 should be initiated and concluded by that same authority.

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However, the circular does not appear to be in tune with the clear meaning of the statutory provisions of Section 6(2)(b) as elaborated by the Allahabad High Court in G.K Trading Company v. Union of India and others, added the bench.

In view of the above, the bench dismissed the petition.

Counsel for Petitioner/ Assessee: Meera V. Menon

Case Title: K.T. Saidalavi v. The State Tax Officer

Case Number: WP(C) NO. 18078 OF 2020

Citation: 2024 LiveLaw (Ker) 635