The High Court of Jharkhand opined that the Preventive Wing of the CGST and DGGI Wing of the CGST shall forward all their investigation carried out against the petitioner and inter-related transactions to the State Authorities, who shall continue with the proceedings from the same stage.
Brief Facts:
The Petitioner is the proprietor of M/s. Manish Trading Company, Lalgutwa, Ranchi, has been carrying on the business of trading Iron & Steel and Cements, since 2017-18. As per the averments made in the writ petition, the purchases and sales are duly reflected in the GST returns furnished by the Petitioner and the outward tax liability is adjusted against the Input Tax Credit available to the Petitioner. An inspection was carried out by the Intelligence Bureau of the State Goods & Service Tax, and GST INS-01 was issued and after the inspection was concluded, the GST Officers fixed the date for furnishing books of accounts. As per the Petitioner, an amount of Rs.34.00 lakhs from the Cash ledger of the Petitioner and Rs.06.00 lakhs from the proprietorship firm of his wife were made to deposit. While the proceedings had been initiated by the State Goods & Services Tax Department, the Petitioner was served with a notice dated 10.04.2023 by the Preventive Branch of Central Goods & Services Tax, Ranchi with a direction to reverse the Input Tax Credit along with interest and penalty on account of alleged purchases from the non-existent entity.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioner contended that attachment of Bank Accounts by issuing GST DRC 22 has been carried out, exercising powers under section 83 of the Central Goods & Services Tax Act, 2017, which is in conflict with the notification issued by the CBEC from time to time, concerning guidelines for attachment of Bank Accounts. It was further submitted that the petitioner having suo-moto deposited an amount of Rs. 40.00 lakhs and having reversed an amount of Rs. 3.42 crores, clearly goes on to suggest that the petitioner is not fly by the night assessee and has been discharging his statutory obligations under the Act. The petitioner has also contended that the attachment of Bank Accounts is bad in law, since the same suffers from the vices of excessive jurisdiction, inasmuch as, to date, there is no determination of any liability whatsoever and the petitioner is not in a position to understand as to whom he has to furnish documents or give a statement, inasmuch as, the petitioner cannot be made to succumb to the jurisdiction of all the three departments and as such, the attachment also is bad in law.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent tried to distinguish the initiation of proceedings by the State Authorities and the proceedings before the DGGI and much has been said by the DGGI upon bursting of the gang at Noida operating in the issuance of fake bills, without supply of goods. The counsel for the state further tried to justify that the proceedings by the State GST Officers do not overlap with that of the proceedings by the CGST or the DGGI.
Observations of the court:
The court stated that bare perusal of Section 6 of the Act, especially Section 6(2)(b), when read with the Clarification dated 05.10.2018, further read with Clarification dated 22.06.2020, when read together, clearly denotes and implies that it is a chain of a particular event happening under the Act and every & any enquiry/investigation carried out at the behest of any of the Department are interrelated.
Further, the court stated that it was a little hesitant to accept such an argument, inasmuch as the State Authorities had also initiated the same very proceeding for wrong/illegal availment of Input Tax Credit. Undeniably, the proceedings at the instance of State Authorities or the Preventive Wing or the DGGI are at the initial stage and the proceedings on the basis of ‘Search & Seizure’ by the State Authorities, is prior in point of time. Hence, Section 6(2)(b) read with clarification dated 05.10.2018, adds to the issues raised by the petitioner herein and manifestly crystalizes that since all the proceedings are interrelated, the State Authorities should continue with the proceedings.
The decision of the Court:
The court directed the Principal Commissioner, Central Goods & Service Tax and Central Excise and Senior Intelligence Officer, Directorate General of GST Intelligence to make over the entire investigations carried to date to the Joint Commissioner of State Taxes, who shall carry out further proceedings against the petitioner in accordance with law.
Case Title: Vivek Narsaria vs State of Jharkhand and ors.
Coram: Hon’ble Mr. Justice Rongon Mukhopadhyay and Hon’ble Mr. Justice Deepak Roshan
Case No.: W.P(T) NO. 4491 of 2023
Advocate for the Petitioner: Ms Nitin Kr. Pasari, Ms. Sidhi Jalan and Shubham Choudhary
Advocate for the Respondent: Mr. Sachin Kumar, Mr. Ravi Prakash Mishra, Mr. Amit Kumar and Mr. Ratnesh Kumar
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