Dlf Home Developers Limited vs. Sales Tax Officer Class Ii Avato Ward 107 Special Zone 12 Delhi & Anr.

Facts

The petitioner, DLF Home Developers Limited, filed a writ petition challenging an order dated 30.12.2023 passed by the Sales Tax Officer (respondent no.1). This order confirmed a demand of ₹28,79,06,786, including interest and penalty, under Section 73 of the CGST and DGST Acts for the period July 2017 to March 2018. The petitioner partially accepted the demand but contested a specific portion related to Input Tax Credit (ITC) to be reversed on non-business transactions and exempt supplies. The petitioner argued that the Directorate General of GST Intelligence (DGGI) had also issued a show cause notice on 02.02.2024 for a broader period (01.07.2017 to 31.03.2021) covering the same issue, and therefore, two authorities should not proceed simultaneously.

Held

The Court found merit in the petitioner's contention that respondent no.1 could not adjudicate a demand that was also the subject matter of other proceedings by the DGGI. It was held that since the tax period covered by the impugned order was subsumed within the broader period of the DGGI's show cause notice, parallel proceedings could not be carried on simultaneously. The Court noted that respondent no.1 was aware of this and had proceeded to confirm the demand without adjudicating it, stating that the demand raised through DRC-01 stood as it is, pending DGGI's proceedings. The learned counsel for respondent no.1, on instructions, stated that the demand concerning ITC reversal on non-business transactions and exempt supplies should be set aside as it would be adjudicated by the DGGI. Consequently, the impugned demand was set aside to the extent it related to ITC reversal on non-business transactions and exempt supplies. The Court directed that the concerned authority (DGGI) shall adjudicate this issue pursuant to the show cause notice dated 02.02.2024. No issue was expressly left undecided.

Key Issues

1. Whether respondent no.1 could adjudicate a demand concerning Input Tax Credit (ITC) reversal on non-business transactions and exempt supplies when parallel proceedings on the same issue were already initiated by the Directorate General of GST Intelligence (DGGI) for a period that subsumed the period under challenge? (Question of law, turning on Section 6(2)(b) of the CGST Act, 2017). Petitioner's contention: The petitioner argued that since the DGGI had issued a show cause notice covering the same issue and tax period, the Sales Tax Officer could not proceed with adjudication, citing Section 6(2)(b) of the CGST Act, 2017, which prohibits parallel proceedings by different authorities on the same issue. They relied on the DGGI's acknowledgement of this fact. Revenue's contention: The Sales Tax Officer (respondent no.1), on instructions, conceded that the demand related to ITC reversal on non-business transactions and exempt supplies should be set aside as it would be adjudicated by the DGGI.