M/S Bhawani Textiles vs. Additional Director General

Held

The Court acknowledged the petitioner's grievance that proceedings were initiated by the DGGI, AZU, Ahmedabad, and subsequently, summonses were issued by both the Deputy Commissioner of State Tax and the DGGI, Surat. The Court referred to a letter dated October 5, 2018, from the Central Board of Excise and Customs, which clarified that officers of both Central and State tax authorities are authorized to initiate intelligence-based enforcement actions on the entire taxpayer base. Crucially, the letter stated that the authority which initiates such action is empowered to complete the entire process, including investigation, adjudication, and recovery. The Court noted that there was nothing on record to indicate that the DGGI had transferred the case. However, the issuance of multiple summonses from different authorities on the same subject matter was observed. The Court disposed of the writ application with a direction to the DGGI, AZU, Ahmedabad, to look into the matter and ensure no undue harassment is caused to the petitioner by different authorities on the same subject matter. The Court explicitly stated that it had not expressed any opinion on the merits of the case.

Facts

The petitioner, M/s Bhawani Textiles, filed a writ application challenging proceedings initiated by Respondent No. 4 and Respondent No. 6. A search was conducted under Section 67 of the CGST Act, 2017, by the Directorate General of Goods and Services Tax Intelligence (DGGI), Ahmedabad Zonal Unit, on April 3, 2019. Following the search, the petitioner received summonses from the Deputy Commissioner of State Tax and the DGGI, Surat. The petitioner replied to these summonses, stating that all their original books of accounts and documents had been seized by the DGGI, Ahmedabad, since April 3, 2019, and requested their case be transferred to the DGGI, Ahmedabad, to avoid duplication of proceedings and harassment.

Key Issues

1. Whether the proceedings initiated by Respondent No. 4 and Respondent No. 6 are bad and without authority of law, considering that the initial search and seizure were conducted by the DGGI, Ahmedabad Zonal Unit? Petitioner's Contention: The petitioner argued that since the DGGI, Ahmedabad Zonal Unit, initiated the enforcement action through a search under Section 67 of the CGST Act, 2017, all subsequent proceedings, including the issuance of summonses by other authorities like the Deputy Commissioner of State Tax, should be handled by the DGGI, Ahmedabad. They relied on the principle that the authority initiating intelligence-based enforcement action is empowered to complete the entire process. The petitioner sought to quash the proceedings initiated by Respondent No. 4 and Respondent No. 6 and to stay any coercive measures against them. Revenue's Contention: The judgment does not record any specific arguments made by the revenue or state respondents.