Green Textorium PVT LTD Th Rajesh Kumar J And K Textile Park Industrial Area Kathua vs. Union Of INDIA Ministry Of Finance Deptt Of Revenue New Delhi And Others

Held

The Court held that intelligence-based enforcement actions, unlike audits or scrutiny of returns, can be initiated by either Central or State tax administrations, irrespective of the taxpayer's assignment, as per Section 6 of the CGST Act. Such actions are based on information of tax evasion from the value chain or transactions, not administrative scrutiny. The Court clarified that actions like issuing summons, searches, or seizures do not constitute 'proceedings' under Section 6(2)(b) of the CGST Act, which refers to the formal commencement of adjudicatory proceedings via a show cause notice. The 'subject matter' refers to the tax liability or obligation arising from a contravention. The bar under Section 6(2)(b) is attracted if two proceedings seek to recover an identical or overlapping tax liability from the same contravention. The Court found no merit in the petitions and dismissed them, clarifying that its conclusions on Section 6 were interpretive and would not prejudice the petitioners from raising other issues before the issuing authority. The Court did not explicitly decide on the permissibility of bunching notices or the competence of the Joint Commissioner for amounts below Rs. 1 crore, leaving these for the issuing authority.

Facts

The petitioners, companies and firms engaged in manufacturing and trading, challenged show cause notices dated April 17, 2024, and summaries dated March 31, 2024, issued by the Joint Commissioner, CGST Jammu. The notices alleged fraudulent availment and utilization of Input Tax Credit (ITC) on bogus transactions. The petitioners argued that the CGST authorities lacked jurisdiction as they were assigned to State Tax Authorities, and that the Joint Commissioner was incompetent to issue notices for amounts below Rs. 1 crore. They also contended that bunching show cause notices for five assessment years (2017-18 to 2021-22) was impermissible. The notices stemmed from intelligence inputs and search operations conducted under Section 67(2) of the CGST Act at the business premises of twelve companies, including the petitioners, located in the Jammu and Kashmir Integrated Textile Park, Kathua.

Key Issues

1. Whether the issuance of a specific notification for cross-empowerment under Section 6 of the CGST Act, 2017 and SGST Act, 2017 is mandatory, and in its absence, can a proper officer under the CGST Act exercise jurisdiction over an assessee assigned to State/UT authorities, and vice versa? The petitioner argued that without such a notification, jurisdiction cannot be exercised across administrations. The respondent did not record specific arguments on this point. 2. Whether bunching of show cause notices under Section 74 of the CGST Act is permissible under law? The petitioner contended that this practice is not permissible. The respondent did not record specific arguments on this point. 3. Whether the Joint Commissioner is a competent authority to issue a show cause notice to an assessee where the amount involved is less than Rs. 1 crore under the CGST Act? The petitioner argued that the Joint Commissioner lacked this jurisdiction. The respondent did not record specific arguments on this point.