K And R Rail Engineering LTD vs. Union Of INDIA

Facts

The petitioner, K and R Rail Engineering Ltd., filed a writ petition before the High Court of Telangana challenging the parallel investigation initiated by the Directorate General of GST Intelligence (DGGI) against it on August 4, 2023. The petitioner alleged that this investigation was without jurisdiction and violated its constitutional rights. The DGGI respondents were the Union of India, CBIC, Additional Director General, Additional/Joint Director, Assistant Director, and Senior Intelligence Officer of DGGI, Hyderabad Zonal Unit, along with the Deputy Commissioner (State Tax)-3. The petitioner sought a declaration of illegality and arbitrariness of the parallel investigation and interim orders to restrain coercive action.

Held

The Court held that in light of the respondents' action of transferring the entire file concerning the fake ITC availed from M/s. LDJ Engineering and Infrastructure Limited to the Deputy Commissioner (ST), STU-1, Secunderabad Division, the issue regarding the fake ITC stands redressed. The Court acknowledged that the DGGI was not initially aware of the parallel inquiry by the State authorities. However, upon discovering the parallel investigation, the DGGI proposed to transfer the matter to the State authorities as per Section 6(2)(b) of the CGST Act, 2017. This action by the respondent effectively resolved the grievance of the petitioner concerning the parallel investigation into the fake ITC. Therefore, the writ petition was disposed of on this basis, with no order as to costs.

Key Issues

1. Whether the parallel investigation initiated by the Directorate General of GST Intelligence (DGGI) against the petitioner, on August 4, 2023, is illegal, arbitrary, and violative of Articles 19(1)(g), 20, and 21 of the Constitution of India, particularly concerning jurisdiction? Petitioner's Contention: The petitioner argued that the parallel investigation by the DGGI was without jurisdiction and thus illegal and arbitrary. They sought a declaration to this effect and interim relief to prevent coercive actions. Revenue/State's Contention: The respondents, through their counsel, were directed to seek instructions regarding the allegation of parallel inquiries. Subsequently, the DGGI informed the Court that they were unaware of the inquiry already initiated by the Deputy Commissioner (State Tax), STU-1, Secunderabad Division. Upon realizing that a parallel inquiry had indeed been initiated by respondent Nos. 3 to 6, they proposed to transfer the case pertaining to the availing of fake Input Tax Credit (ITC) from M/s. LDJ Engineering and Infrastructure Limited to the State Authorities in terms of Section 6(2)(b) of the CGST Act, 2017.