Kanco Tea And Industries Limited vs. The Union Of INDIA And 5 Ors.

WP(C)/3712/2024HC GauhatiGSTCNR GAHC01014528202409 September 2024Bench: HONOURABLE MR. JUSTICE DEVASHIS BARUAH5 pages

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Facts

The Petitioner, Kanco Tea and Industries Limited, challenged summons dated 21.06.2024 and 05.07.2024 issued by Respondent No. 3 (Directorate General of GST Intelligence, Guwahati Zonal Unit). The Petitioner argued that State Authorities (Respondent No. 5) had already investigated transactions with M/s Ridhi Industries and M/s Amazonite Steel Private Ltd., and therefore, the Central Authorities lacked jurisdiction under Section 6(2) of the CGST Act, 2017, to initiate parallel proceedings. The Court had previously directed Respondent No. 3 to clarify if the summons pertained to the same subject matter investigated by the State Unit and Respondent No. 5 to confirm if the impugned summons related to the State's prior investigation.

Held

The Court decided that the Respondent No. 3 (DGGI, Guwahati Zonal Unit) is at liberty to continue its investigation concerning M/s IESA Sales Private Ltd. pursuant to the summons issued on 21.06.2024 and 05.07.2024. This decision was based on the Petitioner's submission that they had no objection to this specific investigation. Furthermore, in view of a communication dated 09.08.2024 issued by the Assistant Commissioner of State Taxes, Sivasagar, which stated that the Input Tax Credit availed by the Petitioner in respect to M/s Ridhi Industries and M/s Amazonite Steels Private Ltd. were genuine and eligible, and considering the submissions made by the learned Standing Counsel for the CGST, the Court directed that the Respondent Authorities, particularly Respondent No. 3, shall not carry out any further investigation concerning the Petitioner's transactions with M/s Ridhi Industries and M/s Amazonite Steels Private Ltd. for the period covered by the aforementioned communication dated 09.08.2024. The ratio decidendi is that once state authorities have concluded an investigation and found transactions to be genuine and eligible, central authorities should not initiate parallel investigations on the same subject matter, adhering to the principle of avoiding multiplicity of proceedings.

Key Issues

1. Whether the Respondent No. 3, a Central Authority, has the jurisdiction to issue summons for investigation into transactions concerning M/s Ridhi Industries and M/s Amazonite Steel Private Ltd. when the State Authorities have already conducted an investigation into the same subject matter, in light of Section 6(2) of the Central Goods and Service Tax Act, 2017? Petitioner's contention: The Petitioner argued that parallel proceedings by central and state authorities on the same subject matter are impermissible. They relied on Section 6(2) of the CGST Act, 2017, to assert that once an authority has initiated proceedings, no other authority can proceed with the same subject matter. Revenue's contention: The Revenue submitted that while the State GST was investigating the availment and utilization of irregular Input Tax Credit (ITC) from M/s Ridhi Industries and M/s Amazonite Steels Pvt. Ltd., and if approved, the matter would be closed by the Central Authorities to avoid parallel investigations. However, in respect to an investigation concerning ITC of Rs. 19,04,328/- from M/s IESA Sales Private Ltd. during 2020-21, the Revenue contended that only the DGGI, Guwahati Zonal Unit, had initiated investigation, and this investigation should be allowed to continue.

Sections Cited

Section 6(2)

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Cause title — parties, addresses and appearances

Page No.# 1/5 GAHC010145282024 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C)/3712/2024 KANCO TEA AND INDUSTRIES LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AT GROUND, 1, MACKEYPORE TEA ESTATE FACTORY, NAZIRA, MACKEYPORE, SIVASAGAR, ASSAM-785685 AND IN THE INSTANT PROCEEDING IS BEING REPRESENTED BY SHRI UMANG KANORIA, THE MANAGING DIRECTOR OF THE PETITIONER COMPANY. VERSUS THE UNION OF INDIA AND 5 ORS. REPRESENTED BY THE SECRETARY, MINISTRY OF FINANCE, HAVING HIS OFFICE AT 137, NORTH BLOCK, NEW DELHI- 110001. 2:THE SENIOR INTELLIGENCE OFFICER DIRECTORATE GENERAL OF GST INTELLIGENCE JAMSHEDPUR REGIONAL UNIT 2ND AND 3RD FLOOR SHAURYA TRADE CENTRE 159 DHALBHUM ROAD SAKCHI JAMSHEDPUR JHARKHAND-831001. 3:THE SENIOR INTELLIGENCE OFFICER DIRECTORATE GENERAL OF GST INTELLIGENCE GUWAHATI ZONAL UNIT H/NO. 77 RUPKONWAR JYOTI PRASAD AGARWALA ROAD OPPOSITE SRIMANTA SANKARDEVA KALASHETRA P.O.PANJABARI GUWAHATI ASSAM Page No.# 2/5 PIN- 781037. 4:THE SUPERINTENDENT OF CGST SONARI RANGE GOVT. OF INDIA NAMTOLA ROAD NEAR SHANI TEMPLE P.O. SONARI DIST. CHARAIDEO ASSAM-785690. 5:THE ASSISTANT COMMISSIONER OF TAXES SIVASAGAR UNIT GOVT. OF ASSAM BORPUKHURI PAR ROAD BEHIND CLUB SIVASAGAR ASAM-785640. 6:THE STATE OF ASSAM REPRESENTED BY THE COMMISSIONER AND SECRETARY TO TE GOVERNMENT OF ASSAM DEPARTMENT OF FINANCE AND TAXATION ASSAM SECRETARIAT DISPUR GUWAHATI-781006 For the Petitioner(s) : Mr A. Kanodia, Advocate : Mr. P. Das, Advocate For the Respondent(s) : Mr. S. C. Keyal, Standing Counsel : Mr. B. Gogoi, Standing Counsel BEFORE HONOURABLE MR. JUSTICE DEVASHIS BARUAH

ORDER Date : 10.09.2024

Heard Mr. A. Kanodia, the learned counsel appearing on behalf of the Petitioner and Mr. S. C. Keyal, the learned Standing counsel appearing on behalf of the Respondent Nos. 1, 2, 3 and 4. I have also heard Mr. B. Gogoi, the Page No.# 3/5 learned Standing counsel appearing on behalf of the Respondent Nos. 5 and 6. 2. The Petitioner herein has challenged the summons dated 21.06.2024 and 05.07.2024 on the ground that the Respondent State Authorities have already made the investigation in respect to the transactions pertaining to M/s Ridhi Industries and M/s Amazonite Steel Private Ltd. and as such the Central Authorities i.e. the Respondent No.3 does not have the juri iction in view of Section 6(2) of the Central Goods and Service Tax, Act, 2017. 3. It is the specific case of the Petitioner that there cannot be two parallel proceedings. This Court vide an order dated 26.07.2024 had issued notice thereby asking the Respondent No.3 to apprise this Court as to whether the summons which have been impugned in the instant proceedings are in respect to the same subject matter for which the State Unit have already investigated upon. In addition to that, the Respondent No.5 who is an Officer of the State Unit was also directed to apprise this Court as to whether the impugned summons relate to the same investigation which was carried out as per the report submitted vide Annexure-9 to the writ petition.

When the matter was listed on 30.08.2024, Mr. S. C. Keyal, the learned Standing counsel for the CGST submitted that the matter of availment of the utilization of irregular and inadmissible ITC from M/s Ridhi Industries and M/s Amazonite Steels Pvt. Ltd. were under investigation with the State GST and if approved, the same would be closed at the end of the Central Authorities as per the provisions of Section 6(2) of the CGST Act, 2017 to avoid parallel investigation in the same matter. The learned Standing counsel further submitted that in respect to the investigation relating to ITC of Rs.19,04,328/- from M/s IESA Sales Private Ltd. during 2020-21 after cancellation of the GST registration, no other authority except the DGGI, Guwahati Zonal unit have Page No.# 4/5 initiated investigation as per the documents available. He further submitted that the investigation in respect of M/s IESA Sales Private Limited ought to be allowed to be continued.

This Court also takes note of that on 30.08.2024, the learned counsel for the Petitioner submitted that the Petitioner has no objection in the investigation so carried out in respect to M/s IESA Sales Private Ltd. During the course of the hearing, the learned counsel for the Petitioner had also placed before this Court an instruction issued by the Assistant Commissioner of State Taxes, Sivasagar to the Deputy Director, Directorate General of GST Intelligence dated 09.08.2024 wherein it has been mentioned that the Input Tax Credit availed by the Petitioner in respect to the parties namely M/s Ridhi Industries and M/s Amazonite Steels Private Ltd. are genuine and eligible. This Court therefore directed the Petitioner to file an additional affidavit in regard to their submissions and bring on record the said document dated 09.08.2024. In addition to that, this Court had also asked Mr. B. Gogoi, the learned counsel for the Respondent Nos. 5 and 6 to verify the contents of the communication dated 09.08.2024 and make appropriate submission.

Pursuant to the order dated 30.08.2024, the Petitioner has filed an affidavit whereby the communication dated 09.08.2024 issued by the Assistant Commissioner of State Taxes, Sivasagar have been enclosed as Annexure-A.

Today, this Court heard Mr. A. Kanodia the learned counsel for the Petitioner who reiterated his submission that the Petitioner has no objection in the question of the investigation so carried out in respect to M/s IESA Sales Pvt. Ltd. Mr. S. C. Keyal, the learned Standing counsel for the Respondent Nos. 1 to 4 reiterated his submissions so made on 30.08.2024. Mr. B. Gogoi, the learned Standing counsel for the Respondent Nos. 5 and 6 also submitted that the Page No.# 5/5 document enclosed as Annexure-A to the additional affidavit filed by the Petitioner is a document issued by the State Authorities.

In view of the above statements and submissions so made, this Court disposes of the instant writ petition with the following observations and directions. The Respondent No.3 shall be at liberty to carry out the investigation in pursuance to the summons issued on 21.06.2024 and 05.07.2024 insofar as M/s IESA Sales Pvt. Ltd. However, in view of the communication dated 09.08.2024 reference to which have been made hereinabove and the submissions so made by the learned Standing counsel for the CGST, the Respondent Authorities more particularly the Respondent No.3 shall not carry out any further investigation in respect to such transaction of the Petitioner with M/s Ridhi Industries and M/s Amazonite Steels Private Ltd. in respect to the period on the basis of which communication dated 09.08.2024 has been issued.

JUDGE Comparing Assistant

Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.