Jai Venktesh Concast Private Limited And Anr vs. The Deputy Commissioner Of State, ITC Investigation Unit And Ors.
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The appellants, Jai Venkatesh Concast Private Limited and another, are before the High Court in an intra-court appeal against an order by a learned Single Bench. The Single Bench had directed the appellants to pay 20% of the disputed tax to receive interim protection from recovery. The appellants had already paid 10% of the disputed tax while preferring an appeal before the first appellate authority. The core issue stems from parallel proceedings initiated by the Directorate General of Goods and Services Tax Intelligence (DGGI) and the State Tax Authority concerning the same subject matter. The DGGI commenced investigation on 13.11.2018, and the Central Authority issued a show cause notice prior to the one issued by the State Authority on 30th September 2022. The appellants' rectification application to drop the State proceedings was rejected.
Held
The Court held that recovery proceedings should remain stayed without imposing any pre-condition. The condition imposed by the learned Single Bench directing the deposit of 20% of the disputed tax was set aside. The authorities were restrained from initiating any coercive steps for recovery until the disposal of the writ petition. The Court reasoned that considering the legal issue involved and the peculiar facts and circumstances, it was appropriate to grant a stay on recovery without imposing further conditions. The Court implicitly agreed with the appellants' contention regarding the parallel proceedings and the potential violation of Section 6(2)(b) of the WBGST Act, and also acknowledged the hardship caused by the non-constitution of the Tribunal. The time for filing the affidavit-in-opposition by the respondent was extended.
Key Issues
1. Whether the appellants could be subjected to further conditions for interim protection after having paid 10% of the disputed tax while filing an appeal before the first appellate authority, especially when the GST Appellate Tribunal is yet to be constituted. 2. Whether the State and Central Tax Authorities can proceed in parallel concerning the same set of facts, and what is the effect of Section 6(2)(b) of the West Bengal Goods and Services Tax Act, 2017, which stipulates that if a proper officer under the Central GST Act has initiated proceedings, no proceedings shall be initiated by the proper officer under the WBGST Act on the same subject matter. Contentions: Petitioner/Appellant: Relied on the Bombay High Court's decision in Rochem India Private Limited v. Union of India and Others, arguing that the non-constitution of the GST Appellate Tribunal should not cause hardship and that the impugned orders should not be given effect to. The appellants also argued that the State Authority should not be permitted to proceed further given the comprehensive investigation by the Central Authority which commenced earlier. Revenue/State: Contended that the decision rendered by the High Court of Bombay would not bind the respondent/West Bengal State Tax Authorities.
Sections Cited
Section 6(2)(b)
AI-generated summary — verify with the full judgment below
2023 Item No.9 gd/s MAT/720/2023 IA NO: CAN/1/2023 Single Bench directing the appellants to pay 20% of the disputed tax within a time frame for being entitled to interim protection from recovery.
The question would be whether the appellants could be put on further condition after the appellants had paid 10% of the disputed tax while preferring an appeal before the first appellate authority. Under the Act any person aggrieved by the order passed by the first appellate authority, he is entitled to prefer an appeal to the Tribunal. However, the Tribunal is to be constituted which has necessitated the appellants to file the writ petition.
2
The issue involved in the writ petition is whether the State and the Central Authorities can proceed parallely with regard to the same set of facts and what would be the effect of Section 6(2)(b) the West Bengal Goods and Services Tax Act, 2017 which states that where a proper officer under the Central Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under the WBGST Act on the same subject matter. Admittedly, in the instant case the DGGI, Kolkata Zonal Unit conducted searches and commenced the investigation as on 13.11.2018. It may be true that show cause notice was issued by the State Authority on 30th September, 2022 but the show cause notice issued by the Central Authority preceded the said show cause notice. Therefore, the assessee had filed a rectification application pointing out this fact and requesting that since the Central Authority has already issued the show cause notice dated 30th September, 2022, before the notice dated 30th November, 2022 issued by the State Authority, requested to drop the proceedings. The said request for rectification was rejected.
Admittedly, the investigation/proceedings commenced by the Central Authority is more comprehensive as it covers several other parties as well and the said party has been subject matter of issue with regard to the proceedings
3 initiated by the State Authorities. Therefore, the question would be as to whether the State Authority can be permitted to proceed further.
The learned advocate for the appellants places reliance on the decision of the Hon’ble Division Bench of the High Court of Bombay in the case of Rochem India Private Limited v. Union of India and Others in Writ Petition No.10883 of 2019 etc. dated 8th February, 2023. Relying upon the said decision which was submitted that affidavit has been filed in the said writ petition by the Chairman of Central Board of Indirect Taxes and in the said affidavit it has been stated that no hardship is caused by the taxpayer due to non-formation of the GST Appellate Tribunal as the period of limitation for filing appeal to the Tribunal is extended by order dated 3rd December, 2019 so that the appeal can be filed within three months after constitution of Tribunal. Ultimately, the writ petitions were disposed of by the High Court of Bombay with the direction that the orders impugned therein will not be given effect to until two weeks after the period prescribed to file an appeal as per the circular dated 18th March, 2020. In the case on hand the writ petition is still pending.
Mr. Debasish Ghosh, learned advocate appearing for the State submitted that the decision
4 rendered by the High Court of Bombay will not bind the respondent/West Bengal State Tax Authorities.
Thus, considering the legal issue involved in this writ petition and also considering the peculiar facts and circumstances, we are of the view that recovery proceedings should remain stayed without imposing any pre-condition.
Accordingly, the authorities are restrained from initiating any coercive steps for recovery till the disposal of the writ petition. Consequently, the condition imposed by the learned Single Bench directing deposit of 20% of the disputed tax is set aside. The time for filing affidavit-in- opposition by the respondent is extended by three weeks from date, reply, if any, be filed within two weeks thereafter.
With the above observation, the writ petition stands disposed of.
(T. S. SIVAGNANAM)
CHIEF JUSTICE
(HIRANMAY BHATTACHARYYA, J.)
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.