M/S. Ssm Exports vs. Commissioner Of Central Excise And Service Tax And CGST Delhi West. & Ors.

Held

The Court held that the Circular dated 05.10.2018 has no application to the facts of the present set of writ petitions. It reasoned that the investigations were initiated by various jurisdictional authorities, and due to common threads found, they were transferred to the DGGI, AZU, to be brought under one umbrella. The Court found no prohibition in the CGST Act or SGST Act for such a transfer of investigation. It also noted that the DGGI, AZU, has pan-India jurisdiction and, as a Central Tax Officer, is empowered to carry out investigations. The Court distinguished the judgment of the High Court of Gujarat in Bhawani Textile (supra), stating that it did not have the occasion to consider the ambit and scope of the Circular dated 05.10.2018. The reliance on Sureshbhai Gadhecha Proprietor of M/s Anmol Traders (supra) was deemed ill-founded as it was merely an order issuing notice. The Court also addressed the argument regarding the binding effect of the Circular, reiterating its inapplicability. Regarding the exercise of all-India jurisdiction, the Court opined that while a 'proper officer' under specific notifications has limited territorial jurisdiction, a situation may arise where investigation from entities outside that jurisdiction is necessary, and the decision to transfer such investigations depends on the facts of each case. In the present case, the Court found no merit in the writ petitions.

Facts

The petitioners, M/s. Indo International Tobacco Ltd. and M/s. SSM Exports, engaged in the tobacco and flavouring compound business respectively, filed writ petitions challenging multiple search operations and summons issued by various GST authorities, including CGST Commissionerates and the Directorate General of Goods and Services Tax Intelligence (DGGI). The petitioner M/s. Indo International Tobacco Ltd. faced a show cause notice for refund rejection and recovery of alleged inadmissible credit amounting to ₹18,26,78,282/- for February 2020, and had its bank account provisionally attached. M/s. SSM Exports' GST registration was cancelled. Both petitioners argued that these actions were taken based on a Circular dated 05.10.2018, which they contended was being misapplied, leading to harassment by multiple agencies. The respondents, represented by the Additional Solicitor General, argued that the DGGI, AZU, with pan-India jurisdiction, had taken over the investigations due to common threads found across different entities.

Key Issues

1. Whether the Circular dated 05.10.2018, issued by the Central Board of Excise and Customs, is applicable to the facts of the present writ petitions, thereby restricting the jurisdiction of the DGGI, AZU, to conduct investigations and issue summons. 2. Whether the actions of the respondent authorities, including multiple search operations and issuance of summons by different agencies, constitute undue harassment to the petitioners, particularly in light of the alleged misapplication of the aforementioned Circular. Petitioner's Arguments: The petitioners contended that the Circular dated 05.10.2018 mandates that intelligence-based enforcement actions initiated by a Central tax authority against a taxpayer administratively assigned to a State tax authority should be handled by the Central authority itself and not transferred. They argued that the DGGI, AZU, was misinterpreting and misapplying this Circular, leading to multiple agencies investigating the same matters and causing harassment. They relied on the Gujarat High Court's decision in Bhawani Textile (supra) and Sureshbhai Gadhecha Proprietor of M/s Anmol Traders (supra) to support their claims regarding the proper application of the Circular and the prevention of harassment. Revenue's Arguments: The respondents argued that the DGGI, AZU, possesses pan-India jurisdiction and that there is no prohibition in the CGST Act or SGST Act preventing the transfer of investigations to it. They contended that common threads were found in the investigations against different entities, necessitating their consolidation under the DGGI, AZU, for a comprehensive order. They asserted that the Circular dated 05.10.2018 was not applicable to the peculiar facts of these cases.