If State GST Has Started Proceedings, They Must Complete The Process; It Cannot Be Transferred To Central GST: Himachal Pradesh High Court

The Himachal Pradesh High Court stated that the State and Central Governments have been extended the same powers under the CGST and SGST Act and if one of the officers has already initiated proceedings, the same cannot be transferred to another and he alone is to issue process under the Act and take it to its logical end.

The Bench of Justice Tarlok Singh Chauhan observed that “….where a proper officer under the CGST Act had initiated proceedings on a subject matter, no proceedings would be initiated by proper officer authorized under the SGST Act or UGST Act on the same subject matter.”

Section 6(1) of the CGST Act, 2017 provides that State and Union Territory tax officers can act as proper officers under this Act, following conditions specified by the Government based on Council recommendations.

Section 6(2)(a) of the CGST Act, 2017 provides that if a proper officer issues an order under the Act, he shall also issue an order under the SGST or the UGST Act, and inform the relevant State or Union Territory tax officer.

Section 6(2)(b) of the CGST Act, 2017 provides that where a proper officer under the SGST Act and the UGST Act has initiated proceedings on a subject matter, the proper officer under the Act would not initiate proceedings “on the same subject matter”.

Section 70 of the CGST 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.

Facts of the case:

The assessee/petitioner was issued summons Section 70 of the HP-GST/CGST Act, 2017 by Department of State Taxes & Excise (Respondent No. 1) to provide documents to show the genuineness of the transactions with the suppliers. The assessee submitted all the documents asked by the Department of State Taxes & Excise.

However, the Director General of GST Intelligence, Rohtak (Respondent No. 2) issued another summons regarding the same suppliers. The assessee notified DGGI, Rohtak that the proceedings for those suppliers were already in progress with Department of State Taxes & Excise and that documents had been submitted accordingly. Despite this, DGGI, Rohtak blocked the assessee's Input Tax Credit. Aggrieved by the action of DGGI, Rohtak the assessee has filed a writ petition before the Himachal Pradesh High Court.

Observations of the High Court:

The bench stated where a proper officer under the CGST Act had initiated proceedings on a subject matter, no proceedings would be initiated by proper officer authorized under the SGST Act or UGST Act on the same subject matter.

The bench after referring to the Circular issued by the Ministry of Finance/ Department of Revenue dated 05.10.2018, opined that central government itself has acknowledged that once the officer of the State authority has initiated action, it would be the proper officer who would then conduct further proceedings under the Act.

“The State and Central Governments have been extended the same powers under the CGST and SGST Act and if one of the officers has already initiated proceedings, the same cannot be transferred to another and he alone is to issue process under the Act and take it to its logical end”, added the bench.

The bench concluded that the term 'subject-matter' used in Section 6(2)(b) of the CGST Act refers to 'the nature of proceedings.' Therefore, it means that if proceedings have already been initiated by respondent No. 1 (Department of State Taxes & Excise), respondent No. 2 (DGGI, Rohtak) cannot initiate proceedings for the same subject matter. Allowing such action would be contrary to the provisions of Section 6(2)(b) of the CGST Act.

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

Counsel for Petitioner/ Assessee: Shrawan Dogra

Counsel for Respondent/ Department: Anup Rattan, A.G. with Mr. Ramakant Sharma and Sharmila Patial, Addl. A.Gs. for respondent No. 1.

Lokender Paul Thakur, Advocate, for respondent No. 2.

Case Title: Kundlas Loh Udyog v. State of H.P. & Anr.

Case Number: CMPMO No. 273 of 2024

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