M/S Baibhaw Construction Private Limited vs. The Union Of INDIA

Held

The Court held that while both State and Central tax authorities can have simultaneous jurisdiction, Section 6(2)(b) of the CGST Act and the CBEC Circular dated 5th October 2018 mandate that if one 'Proper Officer' initiates proceedings, the other shall not proceed on the same subject matter. The Court noted that the notice issued by the State Tax Authority (Annexure-1) was for the financial year 2017-18, while the Central Tax Authority had initiated proceedings earlier, with a summons issued under Section 70 of the CGST Act on 07.07.2021 (referenced in Annexure-3) for the financial years 2017-18 to 2021-22. This earlier initiation by the Central Tax Authority, being an intelligence-based enforcement action, takes precedence. Therefore, the proceedings initiated by the State Tax Authority (Annexure-1) were directed to be kept in abeyance until the Central Tax Authority completes its proceedings. Any documents produced before the State Tax Authority are to be transmitted to the Central Tax Authority. The petitioner was directed to comply with the summons issued by the Central Tax Authority.

Facts

M/s Baibhaw Construction Private Limited, the petitioner, is an assessee under the Bihar Goods and Services Tax Act, 2017. The petitioner is aggrieved by simultaneous proceedings initiated by both State and Central tax authorities for identical assessment periods. The petitioner's primary contention is that the inquiry initiated first should be allowed to conclude, and subsequent summons issued by the other authority should be stayed. The petitioner argues that a 'Proper Officer' authorized under the Act is entitled to proceed under both State and Central GST enactments, referencing Section 6 of the BGST Act. The respondents, including the Union of India and the State of Bihar, sought continuation of the proceedings initiated by their respective authorities.

Key Issues

1. Whether the initiation of simultaneous proceedings by both State and Central tax authorities against the same assessee for identical tax periods is permissible under the GST enactments, specifically Section 6 of the CGST/BGST Act? 2. Whether an intelligence-based enforcement action initiated by one tax authority precludes the other authority from initiating proceedings on the same subject matter, as per the CBEC Circular dated 5th October 2018 and Section 6(2)(b) of the CGST Act? Petitioner's arguments: The petitioner contends that the first inquiry initiated should be allowed to proceed to its logical conclusion. They argue that a 'Proper Officer' is empowered to act under both State and Central GST laws, and therefore, the authority that first commenced proceedings should have exclusive jurisdiction over the subject matter until its conclusion. They rely on Section 6 of the BGST Act. Revenue/State's arguments: The learned Government Advocate and learned ASG sought continuation of the proceedings initiated by the various authorities, implying that simultaneous proceedings are permissible.