In a recent judgment, the Delhi High Court, comprising of Justice Vibhu Bakhru and Justice Amit Mahajan, has ruled that the Directorate General of Goods and Service Tax Intelligence (DGGI) retains the authority to carry out intelligence-based enforcement actions even when investigations by other authorities are ongoing.
Brief Facts of the Case:
The case involved a petitioner who filed a petition challenging ongoing investigations by various investigation agencies. The Directorate General of Goods and Service Tax Intelligence (DGGI) was conducting an investigation concerning the petitioner's activities. The petitioner argued that DGGI's investigation was not valid as another agency, the Delhi Commissionerate, had previously investigated the petitioner for the same period. The petitioner cited Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (CGST Act) and a circular issued by the Central Board of Excise and Customs (CBEC) on October 5, 2018.
Contentions of the Parties:
Petitioner's Contention: The petitioner contended that DGGI, Jaipur, lacked the authority to initiate investigations as the petitioner had already been investigated by the Delhi Commissionerate for the same time frame. The petitioner cited Section 6(2)(b) of the CGST Act and the CBEC circular to support the argument that once a state authority had commenced an investigation, it was obliged to complete it, preventing DGGI, Jaipur, from initiating a fresh investigation.
Department's Contention: The department argued that the petitioner's Input Tax Credit (ITC) had been blocked based on information from DGGI, Jaipur. Additionally, the petitioner's bank account had been provisionally attached at the request of DGGI, Chennai. The department stated that the petitioner's registration had been proposed for cancellation due to discrepancies in returns, though this action was withdrawn after the petitioner provided relevant invoices. The department's position was that the investigation conducted by DGGI, Chennai, had not directly targeted the petitioner, but rather an entity named M/s Balaji Enterprises.
Observations by the Court:
The court began by addressing the petitioner's argument based on Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner contended that the ongoing investigation by DGGI, Jaipur, was not permissible since another agency, the Delhi Commissionerate, had already conducted an investigation for the same period. However, the court observed that the investigation initiated by one authority should not be halted simply due to investigations involving different entities. It stressed that if any authority had deemed it necessary to investigate the petitioner based on specific information, such an investigation should not be stopped or impeded due to ongoing investigations into other entities.
Furthermore, the court analyzed the circular issued by the Central Board of Excise and Customs (CBEC) on October 5, 2018, which clarified that both Central Tax and State Tax authorities were authorized to initiate intelligence-based enforcement actions on the entire taxpayer base, irrespective of the administrative assignment of the taxpayer to any authority. The court reasoned that this circular supported the principle that authorities initiating investigations should be allowed to carry them through to their logical conclusions.
The court also took note of the department's submissions regarding the petitioner's blocked Input Tax Credit (ITC) and the provisional attachment of the petitioner's bank account. It was observed that while certain actions had been taken, no investigation had been conducted by any authority regarding the petitioner's affairs.
The decision of the Court:
In conclusion, the Delhi High Court ruled that DGGI, Jaipur, was within its rights to continue the investigation into the petitioner's affairs.
Case Name: M/S. Hanuman Enterprises (OPC) Pvt. Ltd vs. the Additional Director General Directorate General Of GST Intelligence & Ors.
Coram: Hon’ble Mr. Justice Vibhu Bakhru and Hon’ble Mr. Justice Amit Mahajan
Case No.: W.P.(C) 2900/2023 & CM APPL. 11322/2023
Advocates of the Petitioners: Mrs. Anjali Jha Manish & Mr. Priyadarshi Manish, Advs
Advocatess of the Respondent: Mr. Harpreet Singh, Sr.SC with Ms. Suhani Mathur, Adv. for R1 Mr. Aditya Singla, Sr.SC with Ms. Charu Sharma & Mr. Mahesh Aggarwal, Advs. for R2 Mr. Rajeev Aggarwal, ASC with Mr. Manbhar Mittal, Advs. for R3
Read Judgment @LatestLaws.com
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