Dlf Home Developers Limited vs. Sales Tax Officer Class Ii, Avato, Govt. Of Nct Of Delhi & Anr.
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The petitioner, DLF Home Developers Limited, filed a writ petition challenging a Show Cause Notice (SCN) issued by the Sales Tax Officer Class II, AVATO, Govt. of NCT of Delhi. The petitioner contended that parallel proceedings could not be initiated by two different authorities for the same issue. The SCN was issued for the tax period April 2019 to March 2020, proposing a demand concerning Input Tax Credit (ITC) to be reversed on non-business transactions and exempt supplies. The petitioner had previously filed a similar writ petition (W.P.(C) 11052/2024) concerning the same issue and tax periods, where a Show Cause Notice had also been issued by the Directorate General of GST Intelligence (DGGI). In that prior case, the respondent authority had acknowledged the DGGI's proceedings and confirmed the demand without adjudication, stating it would be adjudicated by the DGGI.
Held
The Court held that the respondent authority cannot adjudicate a demand that is also the subject matter of other proceedings initiated by the DGGI. The Court found merit in the petitioner's contention that parallel proceedings for the same issue and tax period cannot be carried on simultaneously. The Court referred to its previous decision in DLF Home Developers Limited vs. Sales Tax Officer Class II Avato Ward 107 Special Zone 12 Delhi & Anr. [W.P.(C) 11052/2024 dated 04 September 2024], which dealt with an identical controversy. In line with that precedent, the Court restrained the respondents from taking further steps pursuant to the impugned SCN dated 24 May 2024, pertaining to the tax period of April 2019 to March 2020. This restraint is to abide by the final order passed by the DGGI pursuant to its independent SCN dated 02 February 2024. The writ petition was disposed of on these terms, with liberty to the respondent to commence proceedings dependent on the outcome of the DGGI's proceedings. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether the respondent authority can initiate parallel proceedings and adjudicate a demand for ITC reversal on non-business transactions and exempt supplies when the Directorate General of GST Intelligence (DGGI) has already issued a show cause notice for the same issue and tax periods? (Question of law, turning on Section 6(2)(b) of the CGST Act, 2017). Petitioner's Contention: The petitioner argued that two authorities cannot proceed simultaneously in respect of the same issue, citing the principle of avoiding parallel proceedings. They relied on the fact that the DGGI had already issued a show cause notice covering the same period and issue, and that the respondent authority in a previous, identical case had acknowledged this and refrained from adjudicating. Revenue's Contention: The respondent's counsel, on instructions, stated that the demand in respect of ITC to be reversed on non-business transactions and exempt supplies should be set aside as it would be adjudicated by the DGGI.
Sections Cited
Section 6(2)(b)
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Cause title — parties, addresses and appearances
O R D E R %
2024
Learned counsels for parties are ad-idem that the challenge which is raised to the Show Cause Notice [„SCN‟] in this writ petition Special Zone 12 Delhi & Anr. [W.P.(C) 11052/2024 dated 04 September 2024].
While dealing with an identical controversy and where the authorities in purported exercise of powers of the State Goods and Services Tax provisions had sought to initiate parallel proceedings despite the issuance of a comprehensive notice by the Directorate This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/10/2024 at 14:49:33
General of GST Intelligence [„DGGI‟], we had in DLF Home Developers Limited disposed of the writ petition on the following terms:- “2. The present petition is confined only to the demand in respect of ITC to be reversed on non-business transactions and exempt supplies. The petitioner‟s challenge to the said demand is premised on the basis that the Directorate General of GST Intelligence (hereafter the DGGI) has also issued a show cause notice dated 02.02.2024 for the tax period 01.07.2017 to 31.03.2021, which also includes the demand proposed on the aforesaid issue. It is the petitioner‟s case that two authorities cannot proceed simultaneously in respect of the same issue.
The impugned order indicates that respondent no.1 is also fully conscious of the same and therefore, it has proceeded to confirm the demand without adjudicating the same. The relevant extract of the impugned order is set out below :- “........... On ITC to be reversed on non-business transactions & exempt supplies: The taxpayer has informed that the proceeding under the subject has already been taken up by DGGI (HQ), New Delhi had referred section 6(2)(b) of CGST Act 2017 and stated that parallel proceeding cannot be started. Deputy Director Investigation (INV-DGGI (HQ) New Delhi vide letter no DGGI/INV/GST/2722- 2023/INV/o/o/Pr.OGG(HQ)/2028 dated 20.12.2023DGGI (HQ) has acknowledge the fact. Since the proceeding on the issue at being executed by DGGI (HQ), New Delhi, the demand raised through DRC01 sands as it is.”
We find merit in the contention that respondent no.1 cannot adjudicate a demand, which is also the subject matter of other proceedings. Since, the period covered under the impugned order is also subsumed in the show cause notice issued by the DGGI, both the proceedings cannot be carried on simultaneously.
Mr. Rajeev Aggarwal, the learned counsel appearing for respondent no.1 states, on instructions, that the demand, in respect of ITC to be reversed on non-business transactions and exempt supplies, be set aside as the same would be adjudicated by the DGGI.
In view of the above, the impugned demand is required to be set aside to the extent as noted above. It is so directed.
It is clarified that the concerned Authority shall adjudicate the said issue pursuant to a show cause notice dated 02.02.2024 issued by the DGGI. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/10/2024 at 14:49:33
The present petition is allowed in the aforesaid terms. The pending application is also disposed of.”
In view of the above, we restrain the respondents from taking further steps pursuant to the impugned SCN dated 24 May 2024 pertaining to the tax period of April 2019 to March 2020. 4. The aforesaid restraint shall abide by the final order that may be passed by the DGGI pursuant to the independent SCN issued by that authority dated 02 February 2024. 5. The writ petition stands disposed of on the aforesaid terms with liberty to the respondent to commence proceedings dependent upon the outcome of the proceedings by the DGGI.
YASHWANT VARMA, J
RAVINDER DUDEJA, J SEPTEMBER 26, 2024/rw
This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/10/2024 at 14:49:33
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.